CHICAGO: American Airlines (AAL.O) said on Tuesday its workforce will shrink by 40,000, including 19,000 involuntary cuts, in October as the COVID-19 pandemic continues to weigh on air travel, unless the government extends aid for airline employee payrolls.
Airlines received $25 billion in U.S. government stimulus funds in March meant to cover payrolls and protect jobs through September. As the money runs out without a travel recovery in sight, airlines and unions have lobbied Washington for another $25 billion, but talks have stalled as Congress has struggled to reach agreement on a broader coronavirus assistance package.
American stock fell 4.4%, dragging down other airline shares .DJUSAR.
American had 140,000 employees before the pandemic.
In a memo to employees, Chief Executive Doug Parker and President Robert Isom said the one possibility of avoiding involuntary cuts is an extension of government aid, which they said has “enormous bipartisan support.”
The announcement comes in the midst of the four-day Republican National Convention, where President Donald Trump is trying to regain momentum against the backdrop of a pandemic that has killed over 175,000 Americans and produced a recession that has seen the loss of millions of jobs.
Airlines have argued that the industry is essential to a quick economic recovery.
Texas-based American’s planned job cuts comprise 17,500 furloughs of union workers -including 1,600 pilots and 8,100 flight attendants – and 1,500 management positions.
The pilot furloughs are in line with expectations, while the flight attendant numbers are higher than anticipated, two people familiar with the matter said.
Based on current demand levels, American now plans to fly less than 50% of its normal schedule in the fourth quarter, with international flying reduced to only a quarter of 2019 levels, Parker and Isom said in the memo, which was reviewed by Reuters.
American said last week it was suspending flights to 15 small U.S. cities in October without more federal aid, which required a certain level of flying.
Among other large U.S. carriers, United Airlines (UAL.O) has sent notices of potential furloughs to 36,000 employees, while Southwest Airlines (LUV.N) has said it hopes to avoid involuntary cuts this year.
Delta Air Lines (DAL.N) announced on Monday furloughs of nearly 2,000 pilots but has said the numbers could be reduced if they agree to a cut in minimum pay.
Source: Reuters, Reporting by Tracy Rucinski; Editing by Steve Orlofsky