American Airlines Has 20K+ More Employees Than It Needs

Filed Under: American

It looks like a lot of American Airlines employees may be furloughed come October 1…

Airline employees may be laid off come October 1

This is going to be a tough fall for airline employees. The CARES Act has provided US airlines with around $50 billion in support. Part of this funding includes payroll protection, and a condition of that has been that airlines can’t involuntarily furlough any employees through at least September 30.

While airlines will no doubt ask the government for more help in the coming weeks, it seems unlikely that the government will extend full payroll protection beyond September 30.

As a result, most major US airlines are preparing for significant layoffs come October 1, and for some airlines we’re getting a much better sense of just how many employees we’re talking about.

Most major US airlines will lay off employees starting October 1

American Airlines has 20-30% too many employees

American Airlines CEO Doug Parker has today sent a letter to employees, sharing an update on his vision for the company’s future in the coming months.

On the plus side, it’s noted that a lot more people are traveling (which shouldn’t come as a surprise, based on tracking TSA data). American Airlines flew:

  • 965K people in April, for a systemwide load factor of 15%
  • 2.7 million people in May, for a systemwide load factor of 45%
  • 4.2 million people in June, for a systemwide load factor of 63%

While things are headed in the right direction, unfortunately they’re still terrible in absolute terms. As is noted in the letter:

“But to be clear, even with traffic trending upward, the absolute numbers behind these improvements are quite somber. The customer count for the same period last year was between 17 and 19 million each month.”

While airlines are slowly adding back flights, we’re nowhere near the passenger numbers we were once at. Summer 2021 long haul international capacity will be down 25% versus 2019, as American exits 19 international routes from six hubs.

And that gets at the crux of the issue. American Airlines has 20-30% more employees than it needs, representing over 20,000 people. As the letter explains:

“These network changes reflect the near-term reality of operating a smaller airline, and they give us a clearer line of sight to our staffing needs for the year ahead. We currently anticipate having 20 to 30% — or more than 20,000 — more team members on payroll than we need to operate our schedule this fall.

To be clear, this doesn’t mean 20,000 of our team members will be furloughed in October, it simply means we still have work to do to right-size our team for the airline we will operate. We are committed to resetting the airline using a different playbook than the one of past crises where last in, first out furloughs were the expected result. We continue to work with our union partners to find creative solutions that involve voluntary leaves and early-out program.”

American Airlines has been offering voluntary furlough opportunities, but those don’t seem to be that popular, based on the fact that the airline still has so many extra employees.

American Airlines has more staff than it needs

Bottom line

There’s nothing really surprising here. Despite aggressive efforts to get employees to accept voluntary separation packages, American Airlines is still overstaffed for the foreseeable future by 20K+ people.

Parker makes it clear that there won’t necessarily be 20K+ layoffs, as the company will try to work with unions to get creative. I appreciate the effort to not just take a straightforward “last in, first out” approach.

However, I’d be surprised if we didn’t at least see five figure layoffs, unless the government offers more payroll protection.

What kind of furloughs are you expecting from American come October 1?

Comments
  1. Hopefully they can negotiate a way to not have any furloughs but instead have a temporary % paycut across the board.

  2. It is a contentious election year and Congress will issue more bailouts to undeserving big businesses. The economy won’t be stabilized until the virus is contained at level achieved by East Asian and European countries. We are buried in the rabbit holes until a new government hopefully takes power on schedule as expected. Seniority and code of silence still rule the unions.

  3. I’m a management and support staff employee at AA. Personally still employed but it was a dark week as management level staff were notified whether they’re cut this week but still on payroll till October per the cares act. Overall management cuts as announced a month ago was ~30% but it got up to 90% in some departments. It was expected given the circumstances but still horrifying to watch the hammer come down on many people I know. I’d expect them to offer more early out packages to FAs and Pilot groups. But they’ll need to sweeten the package for people to actually bite.

  4. Too bad for them but look at the incredible reduction in carbon output as a result of all of this. I’m sure the dire prediction of having 10 years left before the planet is destroyed has now been lengthened. These people can just get new jobs in green energy. It’s the price they can pay for working in such a polluting industry.

  5. @globetrotter

    You are correct…if Joe Biden’s VP gets elected on November 3rd the virus will be miraculously eradicated by Christmas.

    Or, at least, completely forgotten about by the Media.

  6. CARES Act was a waste. It would have been better to furlough and get the “extra” unemployment than being hung out to wait and see what happens in October. I hope these folks saved, saved and saved and didn’t blow it. I will be outraged if they blow our tax money and show up on the news in October whining about not having any money. They got a better deal than most.

  7. Did you read the recent press release in which AA outlines plans to build upon their partnership with AS and expand in SEA including moving trans-pacific flights from LAX to SEA? One thing I will give them credit for is it seems AA finally has a vision and roadmap for the future.

  8. Any American Airlines employee considering a furlough do not trust Parker. Many retirees accepted early retirement in the past and were promised (in writing) D2 travel privileges and Parker came USAIR and down graded this promised travel in retirement. Additionally Parker tried to terminate pensions retirees currently receive.

  9. @Ralph
    You need to leave! I hate American Airlines too but the employees (most of them) don’t deserve this! If you hate polluting business like the airlines that connect the world then… why are you here?!!

  10. While the load factors are increase, they are based on less overall flights aren’t they? How would those load factors look if AA was still operating the same number of flights as they were pre-virus?

  11. @Jason – a very Trumpian argument you make. No, Biden & his leadership team will actually try and come up with a plan going forward…unlike just hoping it will “magically go away” someday.

  12. @UA-NYC. We’re on god’s plan my friend. Not sure what vapor that you’re smokin. Dan Patrick in Texas, leader of the free world, will tell you, sacrifice a few old people and we’ll all be back to normal soon. No skidmarks at the edge of this cliff. Bring it.

  13. Makes no sense to sack the low men on the totem pole; they work for cheap. AA’s best $$ savings is to axe the old times as they sraw the biggest checks.

  14. I work for the airlines and DO NOT want pay cuts! If it gets to that point I’d rather see layoffs as we would never get those cuts back ever again!!

  15. @UA-NYC not “Trumpian” at all but rather a cynical argument based on how the media are overwhelmingly biased towards one ideology and the lengths they go to to protect their chosen deities. Look at how the national media has fawned over Cuomo and completely ignored that he and he alone sentenced seniors to death in nursing homes.

    Anyway…those who only pay attention exclusively to Leftist Media are what I like to call Urban Hillbillies. They read a lot and think they are learned but in reality are extremely ignorant of other viewpoints and the ugly consequences of overwhelmingly Leftist policies.

    (whispers…the other stark reality of the Covid pandemic, especially in NY, is that public housing and public food assistance programs lead to higher impacts towards minorities.)

  16. @Jason

    Well if you compare Cuomo vs the rest, the numbers don’t lie. Please tell us, how do you propose to save everyone?

    I don’t think Biden can clean up this mess either. Florida or Texas will still be Florida or Texas, regardless of Trump or Biden. I do think that Trump could have done much better especially at federal level back in February.

    Now can we get back to blaming AA and Doug Parker?
    They are our common enemy.

  17. I work for AA in Tulsa. Avionics. I’m a new hire with only 7 months in. Past probation. I spent 10,000 dollars moving myself and family here from Colorado and can say if I get furloughed I will be pissed! There are way too many old guys there that need to just retire. They draw the big bucks and dont do shit at work. Just sit around. It’s time to move along and let the lower wage new guys run this airline.

  18. @Phil

    Welcome to the UNION.

    I spent 12 years of my life putting up with that crap at TULE and you are absolutely right there is a sense of “entitlement” among senior people to come to work and do NOTHING.

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