American Airlines Offers Employees Paid Leave & Early Retirement

Filed Under: American

US airlines are in the process of getting $50 billion in aid from the government. One of the conditions of accepting that aid is that they have to promise not to lay off any employees through at least September 30, 2020.

Therefore the goal for airlines right now is to get employees to voluntarily take leave, because with virtually non-existent demand, they only need a small fraction of their current workforce.

Contention at American over paid vs. unpaid leave

A couple of weeks ago I wrote about the rather generous offer that American Airlines made available to pilots in order to reduce their payroll. Pilots had access to two opportunities:

  • Voluntary Short-Term Leave of Absence — pilots can take advantage of one month, three month, or six month options, during which they’ll be paid for 55 hours per month of flying; pilots will still accrue sick leave, vacation time, and seniority
  • Voluntary Permanent Leave of Absence — pilots who are 62 or older can choose to essentially retire early, and they’ll be paid for 50 hours of flying per month until the mandatory retirement age of 65

Pilots are otherwise typically guaranteed at least 73 hours per month of flying, meaning that pilots accepting this would be getting 60-70% of their normal salary.

American Airlines flight attendants were unhappy that pilots were being offered paid leave options, while their only option was a voluntary unpaid leave. That has finally changed.

American now offering all employees paid leave

American Airlines has now extended both paid leave and paid early out options for most employee groups. Very broadly, here’s what this includes:

  • Employees accepting an early out will receive roughly 50% of their regular minimum pay for a period of one year, and will receive up to 30 months of medical coverage, in addition to travel benefits
  • Employees accepting a leave of absence will receive roughly 25% of their regular minimum pay for the period of their leave, and will maintain medical coverage and travel benefits

Both of these options are much better than what was previously available to employee groups (outside of pilots), and it will be interesting to see how many employees take advantage of this.

Interestingly Delta isn’t offering paid leave options

Delta is known for having by far the best employee relations among the “big three” US carriers. That’s why it’s worth noting that Delta has gotten at least 21,000 employees to volunteer for unpaid leave of various lengths, which represents nearly a quarter of their workforce.

This is obviously a positive reflection of the relationship Delta has with their employees, and that they are working towards a common goal.

At the same time, I can’t help but wonder if Delta employees will be unhappy about the fact that American is granting all levels of employees paid leave, while they’re not getting paid for this.

Bottom line

Airlines have way more employees than they need at the moment, so it’s perfectly logical that they’re looking for employees to volunteer for leave. By offering a paid leave or early out option for more employee groups, American is much more likely to reach their goals in that regard.

At the same time, there is an element to this whole government aid situation that leaves me scratching my head — the government essentially is covering the payroll for airline employees for the next six months, but now airlines are getting a good chunk of employees to take leave or accept an early out. Presumably the airline is pocketing the difference, or using it towards something else.

I’ll be curious to see just how many employees end up accepting this offer from American…

(Tip of the hat to Paul)

Comments
  1. Once the details of the CARES Act filter through the system I suspect the unpaid voluntary part will cease. Especially when employees (of any business) realize that the government will fund their payroll. In some instances with the new $600/week boost in UI lower end employees might find it easier to accept the benefits than try to hang on to their job. Unless you make more than $50K a year $600 is close to take home for most people in those kind of jobs. The question I have is in jobs that accrue seniority (like attendants and pilots) if you terminate your employment and are rehired later does your seniority clock reset or ? That might be a big question for mid career personnel who might not want to leave the industry when business picks back up.

  2. Delta offered 25% pay cuts or Unpaid leave. The high take rates have nothing to do with good employee relations, it was either “make significantly less or find another job to make the same”.

  3. Delta employees actually care about the success of the company once all of this is over. Leadership has done a good job of getting employees to understand there is an ending at some point in the unknown future. With that said, they are putting together an early retirement package, it just hasn’t come out yet. I’m sure they were waiting to release after the CARES Act was approved.

  4. Sure wish you would get your facts straight!
    Employees taking one month leaves are not getting ANY compensation. Period!

  5. As a 32 year flight attendant with AAL I have taken a voluntary leave of absence for one month. I will not be compensated for any of this time off and I will be responsible for my benefits as well.
    Check your facts!!!

  6. This article is correct, Lynne. 31-year veteran AA international purser here. I’m on leave as well. April is unpaid. Starting in May, leaves for flight attendants will be paid the 25%. I’m taking it, since I don’t want to be involved in the chaos of air travel right now. That scares me more than the virus.

  7. “but now airlines are getting a good chunk of employees to take leave or accept an early out. Presumably the airline is pocketing the difference, or using it towards something else.”

    Really shouldn’t matter, the American taxpayer will be made whole.

  8. April and Lynne, check your company email. AAnonomous is right and you can apply for paid VLOA even though you accepted unpaid VLOA.

  9. Jr, both of us are correct, but Lynne’s comment needed clarification. For April, if you took a leave, you’re responsible for paying for your share for healthcare, dental, vision, union dues, etc. I’ll be paying for that out of my own pocket. The leaves offered for May and later, provided that you take either a 3 month, 6 month or 1 year leave, you’ll be paid at about 25% of your pay, and will continue with health benefits, sick time and vacation accrual. Perhaps she was unaware of the new offer. I suspect NO ONE wanted to take the original offer of no pay at all.

  10. Not only is Delta not paying for temporary leaves they are actually cutting the ground employees hours by 25 percent right in the face of the Cares Act stating no cuts in employee PAY RATES.

  11. Moot point now. AA management rescinded the offer of short-term leaves of absence for all B737 and A320 pilots with no explanation.

    These leaves make particular sense for pilots because it also includes ways for them to maintain their currency and training requirements. If these were to lapse, because of a long term leave or furlough, the retraining and reintegration logistics and costs would be much more significant.

  12. @Dianne you might. My wife is with United and she is quarantined for 14 days due to her being on international routes. When this is over she may qualify for reimbursement for that time plus. As I have come to understand UI is available both to people who have completely lost their job/pay and those who have suffered a reduction in hours. All you can do is apply. Remember Federal regulations per the CAREs Act will supersede state regulations so don’t worry if your state website shows something different at the moment. The only ? is if the VLOA stipulates no outside benefits or the Feds have that requirement too. It may work a bit like disability you might get denied at first but have to apply a time or two to get in. Good Luck.

  13. The employees at Delta are not doing this for the love of Delta. They are taking leaves because they are scared of contracting Covid19 and or giving it to there family. I personally know several Dal flight attendants, and ZERO of them are doing it for Delta. The Delta management team has been on a …Startegic Communication… campaign for several years in attempt to develop a Delta Family. However, its all talk. Management has made at least 200m in the last 5 years. Have they offered any of their personal fortune to protect Delta employees, which make their fortune, to help with masks? NO

    If you like Delta , please spread the truth to help all the Delta Employess.

  14. Delta casual observer, pleas get your facts right before posting. The CEO has forfeited his salary for six months and most employees have take LOA because it works for them and it does help saves the company. 20,000 employees

  15. Alaska Is also offering just the pilots a 50+ TFP paid to stay at home and the flight attendants unpaid leave.

  16. How can we be sure that CEO forfeited salary 6months. To make us feel better about giving up 25%pay. or having retirement push down our throats. They will get it back in some way we will never no about. Senior employees are afraid of retribution at work if they don’t take retirement now.

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