American Airlines has this week become the latest major US airline to warn of layoffs as of October 1…
American could furlough up to 25K employees
The funding that US airlines received through the CARES Act precludes them from laying off any employees through September 30, but all bets are off as of October 1. It’s becoming increasingly clear that we should expect lots of layoffs as of then, assuming the government doesn’t provide more payroll support.
This week American Airlines sent out a letter informing employees of upcoming involuntary furloughs. The company makes it clear that around 25,000 American Airlines frontline employees are being notified that they may be subjected to a furlough come October 1, under the Worker Adjustment and Retraining Notification (WARN) Act.
The letter notes that when the CARES Act was signed in March, American had the stated goal of avoiding furloughs, because the company hoped that demand for air travel would steadily rebound by October 1, as the impact of coronavirus dissipated.
That hasn’t happened, though — revenue in June 2020 was down by more than 80% compared to June 2019. Furthermore, with infection rates increasing in several states, and new quarantine restrictions being introduced, demand for air travel is slowing again.
As a result of all of this, the company anticipates having more than 20,000 surplus employees this fall.
While 25,000 WARN notices will be issued, the hope is that the actual number of furloughs will be reduced through a combination of voluntary extended leave and early-out programs:
- American is offering 15, 18, and 24 month extended leave programs, that provide continued medical coverage, non-rev travel privileges, and partial pay for some employees
- American is offering an early-out program for employees with at least 10 years at the company, including a retiree health reimbursement arrangement and positive space travel
American Airlines issued WARN notices to 25K employees
WARN notice breakdown by workgroup
Here’s how many employees in each workgroup received a WARN notice, and what percent of each workgroup that represents:
- 9,950 flight attendants, representing 37% of the workgroup
- 4,500 fleet service employees, representing 26% of the workgroup
- 3,200 maintenance employees, representing 22% of the workgroup
- 2,900 passenger service employees, representing 30% of the workgroup
- 2,500 pilots, representing 18% of the workgroup
- 1,000 reservations employees, representing 23% of the workgroup
- 175 dispatch employees, representing 36% of the workgroup
- 50 flight crew training instructors, representing 15% of the workgroup
- 10 flight simulator engineers, representing 7% of the workgroup
18% of pilots received WARN notices
American is still hoping for more government aid
The letter to employees also notes the potential for the government to extend its Payroll Support Program by a further six months, which would delay any layoffs. The airline hopes that demand would recover more by next spring, meaning fewer layoffs would be needed.
Employees are encouraged to work with unions to make their voices heard in favor of further government support:
“It’s worth noting that each of our unions has expressed support for legislation that would extend the Payroll Support Program funding for six months in light of the much longer impact of the pandemic than was anticipated when the CARES Act was enacted. As currently proposed, the effect of this legislation would be to delay any involuntary furloughs until March 31, 2021, at which point there would most certainly be more demand for air travel, and along with that demand, much less need for involuntary furloughs throughout the industry.
This is a union-led initiative across our industry, but American is supportive of any legislation that would protect our team’s jobs during these extraordinary times. If you are interested in supporting these legislative efforts, we recommend that you work with your union leaders to ensure your voice is heard. That an extension of the Payroll Support Program is being considered illustrates the incredibly important work all of you do every day across our country and globe. Notably each direct airline job supports 13 additional jobs that support our aviation infrastructure and industry.”
Could the government extend support for airlines?
American Airlines has issued around 25,000 WARN notices, as the company anticipates having to furlough employees as of October 1. These numbers are higher than were hoped a few months ago, but then again, the recovery of air travel is slowing down.
American Airlines has issued WARN notices to significantly fewer employees than United Airlines — despite United having a smaller workforce, the company issued notices to 36,000 employees, representing 40% of its workforce.
The reason for this is likely that American has run the most aggressive schedule of major US airlines during the pandemic, and we can expect that to continue.
It’s also worth keeping in mind that WARN notices won’t necessarily directly reflect how many employees will actually be furloughed come October.
I’ll be curious to see if the government pledges any further support. I feel bad for all the airline employees facing so much uncertainty right now (as is the case with so many industries, for that matter).