American Airlines is seeking US government support of $12 billion to tide it over for the next six months, while the coronavirus pandemic continues to wreak havoc on the global aviation industry.
The company said that for the next coming months there won't be any "compulsory furloughs" or cuts in the pay rates or benefits. Staff will also be given improved opportunities for voluntary leave and early retirement.
The airline is qualified for approximately $6 billion in payroll grants and $6 billion in loans under a stimulus package intended to help airlines and other businesses cope with the debilitating health situation.
American Airlines will be able to navigate through the challenging times and "worst possible scenario" between the government funds and its own cash role, Chief Executive Doug Parker and President Robert Isom said in a memo.
The world's largest airline in terms of number of passengers is pursuing a chunk off the $2 trillion COVID-19 economic relief fund from the government, of which $50 billion has been set aside for airlines and will be rolled out in grants, and half in payroll loans.
The firm made a profit of $2.9 billion last year and repaid $1.3 billion to shareholders through dividends and buybacks, Bloomberg reported. Shares of the airlines plunged nearly 14 percent early on Monday.
The company, with the highest number of workers of any U.S. airline, also plans to improve conditions for voluntary unpaid leave and early retirement opportunities for flight attendants and other workers, it said.
In 2019, American Airlines had 133,700 full-time workers, about 85 percent of whom were union members. Wages and benefits constitute the biggest operating cost, accounting for 35 percent of the total.
With airlines reducing their flying operations as the pandemic crippled demand for air travel, their requirement for pilots, flight attendants, mechanics and gate agents decreased.
In April, American Airlines trimmed its domestic flights by 60 percent compared to 2019, and in May by 80 percent. In the same time, it also suspended 80 to 90 percent of international flights, the company disclosed last week.
The aviation sector has been among the hardest affected by the ongoing turmoil, with the International Air Transport Association (IATA) reporting that this year's passenger sales are projected to nosedive by $252 billion compared to last year.
Airlines say they will need qualified workers ready to return to work once demand normalizes. Airlines can not lay off any workers before September 30, under the terms of the US government's payroll grants.
