Around 25,000 front-line workers of American Airlines may be placed on furlough – or totally lose their jobs – as the carrier is overburdened by the negative impact of the ongoing global health turmoil shaking the aviation industry.
The warning from the airlines' management on Wednesday will affect approximately 30 percent of American's U.S. mainline headcount as operations are almost incapacitated by a huge drop in air travel brought about by the continuous rise in coronavirus cases in key states in the U.S. and around the world.
The carrier has also encouraged workers to take new extended leaves, which can last up to two years, or opt for early retirement instead in order to get as many staff off the payroll as possible before they have to cut their jobs involuntarily.
American Airlines' sales in June were down by over 80 percent compared to the previous year, chief executive officer Doug Parker and President Robert Isom disclosed in a memo to personnel.
The memo from the CEO and President disclosed that American Airlines hopes to prevent those furloughs from happening, which include roughly 10,000 flight attendants and 2,500 pilots.
In the correspondence, it stated that the carrier hopes to cut the actual number of furloughs "significantly through enhanced leave and early-out programs for represented workgroups," Pete Muntean of CNN wrote.
The government rescue program for the airline industry prohibited terminations, involuntary furloughs, or salary reductions for workers. But that restriction ends on October 1, and airline executives have been very straightforward that job reductions are in the offing once it does, with projections that up to one-third of the industry's workforce could be taken down.
Airlines in the U.S. that have been granted federal stimulus under the CARES Act cannot terminate employees until after September 30. In addition to American Airlines' layoff notices to pilots and flight attendants, memos were also sent to 3,200 maintenance personnel and 1,000 reservation officers.
American Airlines' announcement is similar to that of United Airlines last week that warned of as many as 36,000 furloughs. Delta and Southwest Airlines also alerted they may have to slash jobs if voluntary offerings do not attain enough savings.
U.S. carriers were given up to $25 billion in government rescue funds to help cushion payroll costs in exchange for not terminating workers until October. American received $5.8 billion in cash and loans, Delta received $5.4 billion and United Airlines got $5 billion. The financial lifeline likely only delayed large-scale job cuts throughout the airline sector.
