CHICAGO (Reuters) – American Airlines 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.
Shares in American, which had 140,000 employees before the pandemic, fell 2.7%.
In a memo to employees, Chief Executive Doug Parker and President Robert Isom said the first relief bill had assumed the virus would be under control and demand recovered by Sept. 30.
“That is obviously not the case,” they said.
Texas-based American’s 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 resulted in the loss of millions of jobs.
Airlines have argued that the industry is essential to a quick economic recovery.
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.
They are below the 25,000 warning on possible job cuts American sent last month thanks to early retirements and leaves.
Based on current demand levels, American said it 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.
American said last week it was suspending flights to 15 small U.S. cities in October without more federal aid.
United Airlines has warned that 36,000 jobs are on the line but has not announced final cuts.
Among other large U.S. airlines, Delta Air Lines on Monday announced furloughs of nearly 2,000 pilots but has said the numbers could be reduced if they agree to a cut in minimum pay.
Southwest Airlines has said it hopes to avoid involuntary cuts this year thanks to strong demand for voluntary severance packages.
Budget carrier Spirit Airlines’ pilots union said on Tuesday that nearly half of around 2,500 pilots had agreed to work fewer hours every month to prevent 600 furloughs in October.
(Reporting by Tracy Rucinski; Editing by Steve Orlofsky and Dan Grebler)
