American Airlines’ Workforce Shrinking By 40K People

Filed Under: American

For the past few months airlines have been planning layoffs for around October 1. However, the number of planned layoffs has been constantly changing, as it’s dependent upon how demand recovers, how many employees take voluntary separation packages, etc.

Well, today American Airlines has provided a better sense of how many people could be losing their jobs soon.

American will furlough 19K employees

American Airlines’ CEO and President (Doug Parker and Robert Isom) today sent a letter to employees, which they describe as “the hardest message we have had to share so far.”

It’s noted that back at the beginning of the pandemic, American hoped to avoid involuntary furloughs. However, that was based on American’s hope that the virus would be under control and demand for air travel would have returned, which is not the case.

American is expecting a greatly reduced schedule going forward:

  • In the fourth quarter, American plans to reduce capacity by around 50% compared to the same period last year
  • Things look even worse in the fourth quarter for long haul international flying, which will be reduced by around 75% compared to the same period last year

And that brings us to the involuntary furlough news — American Airlines’ workforce will shrink by around 40,000 people. The company had around 140,000 employees pre-pandemic, while as of October it will only have around 100,000 employees.

These aren’t all involuntary furloughs, though:

  • More than 12,500 employees have accepted early out or retirement programs
  • Another 11,000 employees have accepted leaves of absence in October
  • Unfortunately that means around 19,000 employees will be involuntarily furloughed come October 1, assuming there’s no Payroll Support Program extension

The 19,000 involuntary furloughs is at least lower than it could have been. A few weeks back American sent out 25,000 WARN Act notices, notifying employees of the potential for that many layoffs.

American will operate only 50% of its previous schedule in the fourth quarter

What work groups are seeing most layoffs?

So, what’s the breakdown of anticipated involuntary furloughs by workgroup?

  • 8,100 flight attendants
  • 3,000 employees at wholly owned subsidiaries (American’s regional airlines)
  • 2,225 fleet service employees
  • 1,600 pilots
  • 1,275 passenger service employees
  • 800 maintenance employees
  • 150 dispatch employees
  • 12 flight crew training instructors

There will be no involuntary furloughs among reservations employees and flight simulator engineers.

American subsidiaries will also see layoffs

American still hoping for more government aid

The whole reason these furloughs are happening on October 1 is because US airlines benefited from the CARES Act, which precluded them from laying off any employees through September 30 (in exchange for a very generous Payroll Support Program).

Airlines want a clean extension of the Payroll Support Program.. I’m not opposed to airlines getting some form of government assistance given the circumstances, but the way that airlines are going about this is greedy:

  • Current estimates suggest that air travel won’t recover until 2024, so pushing off layoffs by another six months won’t actually preserve jobs, it will just push off layoffs by a further six months
  • Airlines have gotten tens of thousands of people to accept voluntary leave packages, so workforces are already much smaller than they were several months ago; if payroll support is extended, shouldn’t the amount reflect that, as airlines would essentially be profiting off of this?
  • Again, I support the government doing more for everyone, but why should the salary of a $250K per year airline captain be preserved for another six months, while those working in other industries get very little?

In the letter to employees today, American’s leadership notes that these layoffs could be avoided if the government just extended the Payroll Support Program, encouraging employees to write to their elected officials:

The one possibility of avoiding these involuntary reductions on Oct. 1 is a clean extension of the PSP. Led by your labor unions, with the support of the industry, we have generated enormous bipartisan support for such an extension. The overwhelming majority of members of both the U.S. House and Senate appreciate that saving jobs in the airline industry through this crisis will mean a quicker economic recovery in the months and years ahead. And that preserving these essential service jobs will also mean continued commercial air service to all communities, small and large.

But, despite this broad bipartisan support, a PSP extension is tied up in a larger COVID-19 relief package, which our elected officials haven’t yet been able to negotiate. So we must prepare for the possibility that our nation’s leadership will not be able to find a way to further support aviation professionals and the service we provide, especially to smaller communities. If you haven’t already done so, you can let your elected officials know just how important a PSP extension is to you, your families and our economic recovery.

American is hoping for an extension of the Payroll Support Program

Bottom line

It’s extremely sad that American’s workforce will be shrinking by 40,000 people, including 19,000 involuntary layoffs. That’s so many people and so many families impacted.

The only thing that will prevent these layoffs is more government support for when the current Payroll Support Program runs out on September 30. While I’m not opposed to airlines getting some further government support, I can’t help but feel like a clean extension of payroll support is incredibly fiscally irresponsible.

Comments
  1. I don’t believe this for a second. This is an attempt by American to either get another subsidy from Uncle Sam or union concessions; perhaps both.

  2. I’d like to think that the people keeping their jobs are the best employees who provide top quality service. I’d like to think that but the reality is more than likely that the union is protecting jobs based on seniority and that service declines maybe much more noticeable. Artificially keeping people on the payroll for airlines is nonsensical. It is not like demand will suddenly return to the levels that it was pre-pandemic. The pandemic is going to be with us for awhile impacting travel and on top of that the economic fallout of this will leave many people with less disposable income so even when the virus is gone demand will still be soft. Airlines need to slim down now, because it will be years before demand fully recovers.

  3. @FNT Delta Diamond yes, it does look like American is trying to whip up hysteria to pressure the government. I’m not sure why large airlines should be saved when many other industries are also suffering. Are airline jobs more important than other jobs? I think not. As I mentioned in my other comment I don’t see demand bouncing back anytime soon for airlines, so its better just to get this over with instead of throwing good money after bad trying to prop up a company that is too big for its own good.

  4. I don’t support them getting another extension like they got before. Why would someone not working be entitled to 250,000 a year payments while some can’t find work and get $400 a week?

  5. The airlines never should have gotten the 1st round of funds. Every other industry has laid off employees why shouldnt the Airlines as well. I can see it reoccurring every time the period ends we will keep hearing the warnings stop it now by not giving them another dime

  6. @Ben, I kind of get the impression you’re stirring the populist pot just to retain reader interest in the long spirit of talk radio. That said, I’ll bite …

    I tend to dislike bailouts. For example, I feel like we should have let the carnage run much further during the 2009 housing crisis. Speculators, bad banks, bad businesses, and recipients of irresponsible loans would have been chastened and discouraged from behaving in the same way in the future. That said, there’s a different set of arguments for preserving air travel and the arline industry:

    1) Air travel is economically “good” in a way that restaurants and other industries are not. Air travel encourages all sorts of ancillary industry: hotels, tours, car rental, car manufacture, pot-stirring travel bloggers, etc. Travel is liberalizing and makes people less insular and less bigoted. Travel encourages people to reach their potential in terms of career.

    2) Air travel has tremendous startup costs and tremendous fixed costs. It is organizationally complex in a way that a restaurant is not. If a restaurant closes, it is relatively simple for another operator to build a similar business. If an airline dies, it is very difficult to replace. Decreased numbers of airlines mean decreased competition, higher prices, and less choice. At higher levels, this creates a dumber, less worldly, less agile workforce.

    There is a case to be made for propping up these industries and employees until COVID is conquered and everything returns to as it was before. That endpoint is difficult to see now, but is a near-certainty in time. You keep talking about the recovery being delayed until 2024, but we don’t know that with certainty. Technology and vaccines could change a lot, quickly.

    The fact that some industries get bailouts and some don’t isn’t exactly “fair” — there will be some winners and some losers — but government assistance and life never really is, is it?

  7. Still trying to figure out where that 40k number came from ……

    Is it total former employees (retirements, etc)?

  8. Time to pull the band-aide off fast and shrink the workforce. It will be better in the long run for the country, economy and the airlines if they can start operating their businesses without restriction and return to profitability.

    While tough on the employees and their families (I’ve been there twice in my life), they can now move and plan for what’s next. My thoughts go with you, I know how tough the next year is going to be.

  9. @Paulz – I think the 40K number is the total of Early Outs (12.5K) + October Leaves of Absence (11K) + Furloughs (19K). That equals 42.5K total folks dropping from payroll.

  10. Absolutely tragic seeing so many amazing, young, passionate cabin and flight crew lose their jobs – the pandemic was the one opportunity for the US legacy airlines to bust the seniority system. Instead, they’ve stuck with it and doubled down and the customer will, in most cases, be the loser.

  11. It is one thing to provide temporary support when you think a recovery is near and those in need get the money but I don’t think we see that happening here.

    The airlines have been poorly run forever and without any real hope of recovering in the near future, they need to shrink, preferably starting at the top.

    Too many people only plan for the best case and the airlines certainly are an example of that.

  12. For everyone bashing the bailout, the first one was done to keep employees to fly to small and medium markets. When demand goes from good to next to nothing, airlines would’ve had to drop service left and right. Most of these routes are highly subsidized anyways because they don’t make money – they are considered critical infrastructure. Without these flights, these towns and cities will be left behind from any economic recovery. As much as people claim people are leaving cities, rural areas will be literally cut off from the world forcing people to actually move to suburbs and cities. But just like the USPS, people want to run critical infrastructure and and public services like a private enterprise. Without subsidization, rural America is going to die out. Small towns and cities have no more money to help attract and subsidize air service. Without and federal support, it’s going to be a very dark future for these areas economically.

  13. @Dan points out something worth thinking about. The US is fast turning into small clusters of prosperity centered around big cities (NYC, LA, SF, Seattle, Miami, Dallas, Boston) with vast deserts of opportunity elsewhere. Air travel is one lifeline to small cities’ industry and future. Lose that, and the hollowing out of non-urban America will accelerate.

  14. At what point will we admit that the costs of a lockdown (joblessness, the growing mental health crisis, destruction of local/mom and pop businesses) outweigh the contrary?

  15. @Kendor, one person’s “lifeline to small cities’ industry and future“ is another’s “wasteful uneconomic subsidy that could be better spent elsewhere”.

  16. @Dan @kendor People leave small towns to get away from the small town mentality aka racism , homophobia and bible thumping. Subsidizing airlines to preserve small towns is using govt money to promote religion and bigotry. Hardly a good use of govt. money. Small towns can attract people by being more welcoming and open minded. The pandemic is a great opportunity to attract WFHomers who want lower cost of living and more space but instead the entrenched interests would rather protest mask wearing. Stop with the subsidies for rural America. We can import food much cheaper. Let the population move to cities and lets turn flyover country into a natural preserve like the Amazon.

  17. @Bill

    “I’d like to think that but the reality is more than likely that the union is protecting jobs based on seniority”

    Not quite. The reality is there exists a contract between management and labor that all parties have agreed to. The union’s job is to ensure that management follows the contract as agreed.

  18. @Anon I’ve lived in really big and really small cities, and I disagree with your conclusions. Racism, homophobia, and fundamentalist Bible/Torah/Koran thumping are a features of cities small and big: small-town America does not have any sort of a lock on that kind of prejudice, and many decent people in small towns are wholly intolerant of the sort of intolerance you’re citing. There is an assumption baked into your response that small-town America is somehow poor, pathetic, valueless, and eternally subsidized.

    I lived for awhile in an “undesirable” city in Central California that nobody “cool” wanted to live in. How interesting it was to learn that there were literal billionaires who chose to live in that town, their barns filled with Lamborghinis and other exotic cars. Their wealth was tied to the business and industry of that uncool place. Central California produces the majority of America’s produce and the majority of the world’s nut crop: there’s a lot of money and industry tied up in what you call flyover country. Also good to have space for home-based industry: we’ve all discovered that maybe it wasn’t such a bright idea to rely on a supply chain for PPE that’s 10,000 miles away. It does not serve the people who live in small places nor the America as a whole to cut these cities off from the rest of America’s people or culture.

  19. @Business Guy

    We don’t actually have a full lockdown anymore in the U.S. Anyone can hop on a plane tomorrow for a domestic flight, but there’s still a pervasive fear of the virus in the country and people think planes are an easy place to get the virus (which may or may not be true, we don’t really know).

    To be fair we never had a lockdown as strict as they had in Europe at any point in time, and we never had a nationwide lockdown. A big part of the problem is that we just didn’t get the virus under control with our “lockdown” since the case numbers were still fairly high and contact tracing and testing was not where it needed to be when states reopened. At the same time we managed to weaken a lot of businesses. So it was poor execution of the virus response.

    At this point universal masking and being semi-open might be all we need, but I hope the country follows it through to a point where the virus is under control (or much better controlled).

  20. @1KBrad No, Stockton, which I kinda enjoyed, even it was so very very different from my longtime home of Seattle.

    I will never forget going out for a 20 mile run in Stockton, far past the edge of town along the levees and through the fields, running along a dusty country road, and abruptly feeling all 12 cylinders of a Lamboghini Countach roar right past me. Someone was cheerfully driving their exotic supercar through the rocks and dirt, presumably on their way home to someplace in the fields. Stockton was an amazingly diverse place in every way.

  21. I went through layoffs 3-4 times in this industry. I loved working in this industry it was my life, but the last time I was laid off I vowed never to go back. In hindsight it turned out to be a blessing. More time with my family, no more temptations while traveling away from home, no more stress from passengers who were always stressed themselves from irregular flight ops, DB, weather, etc. I also found another career that paid much better, was much more rewarding, and filled the social gap of the airline subculture I left behind. Many prayers and good fortune for all you airline employees affected. You can survive. If I did it and you can do it too!

  22. It is irresponsible.

    Our government was never tasked to be a pandemic relief program. Money doesn’t grow on trees, and the more we borrow from ourselves, the more serious the national security with countries that are not engaging in such behavior. (Communist countries).

    Borrowing ourselves out of a pandemic is utterly destructive.

  23. @kendor, Stockton is hardly middle of nowhere. It’s only hour and a half from sfo. I’ve been there multiple times. I fully agree that US should not farm out critical infrastructures to foreign countries like PPE. However, there are tons of fly over places that are essentially subsidized by government that are hardly critical. If people choose to live in rural America, then so be it. You love to live in nature for miles on end (which sounds great right now). You also have a relatively cheap housing prices. However, you also choose to live in a place that you may have to drive hours perhaps even a day to get to an airport. We all make sacrifies. People who choose to live close to big cities, they get traffic jams, expensive housing, etc. But they also get to live close to airports that economically make sense for airlines. That’s the way it should be. Government should not subsidize airports that are not essential. It’s a free country. People can make their own choices where they live and where they want to work.

  24. Like @Bill I would like to thing that AA is managing to retain their best employees. This current situation would seem like an opportunity to off-load many FAs who have a record of sub-par performance (betting there are a a lot!) who might otherwise have been protected by a union.
    Just imagine, a revitalised AA staffed by friendly, enthusiastic can-do flight crew!……..
    OK, a guy can have his dreams in this bleak time, right?

  25. Meanwhile Southwest is turning down future government loans. They don’t think taxpayer money is insurance for poor management.

  26. The captains who make $250k/year aren’t the ones who would be aided by an extension of CARES. The pilots who would be aided are younger, make anywhere from $50-90k/year, are still paying off flight training (which isn’t cheap), and have young families still at home. Many were also furloughed in 2008, which means they were just catching up from financial impacts of the last furlough.

    Maybe get the whole picture before you write next time.

  27. The mask rules discourage many from flying. No one wants to be cooped up in a plane for hours trying to breathe stale air through a hot, germy mask, and no one wants to go on vacation and be forced to wear one everywhere at their destination, not to mention undergoing two weeks of house arrest when you get to some of the places.

    Drop the mask rules, and people will fly again. Otherwise, forget it… I’d rather sit in a lawn chair in my back yard.

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