American Airlines warns 25,000 workers they could lose jobs

Air travel has picked up slowly since mid-April, but remains severely depressed. (AP photo)

American Airlines is notifying about 25,000 workers that their jobs could be eliminated in October because of plunging demand for air travel, adding to the toll that the virus pandemic is taking on the airline industry. American’s top executives said on Wednesday that the number of layoffs or furloughs could be lower if enough workers take buyouts or accept partially paid leave for up to two years.

Airline officials thought they might avoid any furloughs “because we believed demand for air travel would steadily rebound by October 1 as the impact of COVID-19 dissipated. That unfortunately has not been the case”, CEO Doug Parker and president Robert Isom said in a memo to employees.

Air travel has picked up slowly since mid-April, but remains severely depressed. American’s passenger revenue in June was down more than 80 per cent from the same month last year. US airlines accepted up to USD 25 billion in federal aid to help cover payroll costs in exchange for not cutting jobs until October. American received USD 5.8 billion in cash and loans, Delta got USD 5.4 billion and United Airlines received USD 5 billion. The aid likely only delayed massive job cuts throughout the airline industry.

Last week, United told 36,000 employees that they could lose their jobs in October. Delta has sent notices to more than 2,000 pilots. Separately, Delta Air Lines said on Wednesday that it expects to take a charge of USD 2.7 billion to USD 3.3 billion to cover the cost of early retirements and buyouts for employees as it shrinks in response to a sharp decline in air travel.

The airline said this week that 17,000 employees have agreed to depart. Delta said in a regulatory filing that USD 500 million to USD 600 million of the charge would go toward cash payments to pilots, flight attendants, ground workers and other departing employees in the July-September quarter. Employees who agree to leave get payments, health insurance and, in some cases, retiree healthcare benefits.

Delta CEO Ed Bastian said the airline hopes to carry out the “vast majority of the head count changes we need” through voluntary departures, “minimising, if not eliminating, the need for involuntary furloughs”.