Major American carriers United Airlines and American Airlines are both planning to cut a combined 32,000 jobs to further reduce costs amid the prolonged pandemic. American announced on Wednesday that it had no other choice but to cut its workforce. United also expressed the same sentiment, noting that the decision was a very hard one to make.
American Airlines' chief executive officer, Doug Parker, mentioned in stated that the company will be cutting around 19,000 jobs after it failed to secure additional federal funding. In a separate statement, United Airlines' chief executive officer, Scott Kirby, revealed that they would be cutting around 13,000 jobs.
Prior to the announcement, Parker mentioned during an interview that the company was hoping to cancel its plans of reducing its workforce if Congress and the Treasury Department would lend it additional financial aid. American Airlines, along with other major carriers, were negotiating for the release of a new multi-trillion dollar stimulus package with the government. This included a $25 billion budget to support the ailing U.S. airlines.
House Democrats have so far chosen to hold off on voting for the stimulus package to allow for more time for negotiations. Sources close to the matter stated that completing an agreement will likely still take time; time that most airlines likely don't have the luxury of spending.
In a memo to company staff members, Parker touched on the subject and explained that there is still no guarantee that the negotiations will result in any positive outcome. He also added that the company is imploring government officials to reach a compromise to complete the deal to save as many jobs as possible.
The drastic measure by both airlines comes as the travel industry continues to be at record low levels amid the prolonged pandemic. During the first half of the year, American Airlines reported a record $5 billion loss, while United Airlines reported a $3.3 billion loss. All other airlines around the world have also reported losses amid the essentially non-existent travel demand. Industry experts have also predicted that the slump may continue into 2021.
Earlier in the year, lawmakers had granted a $25 billion package to the nation's airlines. The grant came with the condition that they would hold off on laying off employees until the end of September.