American Airlines has this week become the last major US airline to warn of layoffs beginning October 1 …
American could suspend up to 25,000 employees
Funding received by US airlines through the CARES Act prevents them from firing employees until September 30, but all bets are canceled as of October 1. It is increasingly clear that we should expect many layoffs thereafter, assuming the government does not. Do not provide further payroll support.
This week, American Airlines sent out a letter informing employees of the upcoming involuntary leave. The company makes clear that about 25,000 American Airlines front-line employees are being notified that they can be licensed on October 1, in accordance with the Worker Recycling and Adjustment Notification Act (WARN).
The letter notes that when the CARES Act was signed in March, American had the stated goal of avoiding permits, because the company expected air travel demand to steadily recover by October 1, as the coronavirus impact dissipated. .
However, that has not happened: revenues in June 2020 decreased by more than 80% compared to June 2019. In addition, with the increase in infection rates in several states and the introduction of new quarantine restrictions, the Demand for air travel is slowing again.
As a result of all this, the company anticipates having more than 20,000 surplus employees this fall.
While 25,000 WARN notices will be issued, the actual number of permits is expected to be reduced through a combination of extended voluntary license and early departure programs:
- American offers 15, 18, and 24-month extended leave programs that provide continuous medical coverage, unpaid travel privileges, and partial pay for some employees
- American offers an early departure program for employees with at least 10 years with the company, which includes a retiree health reimbursement agreement and positive space travel
American Airlines issued WARN notices to 25K employees
Breakdown of notices by work group
Here’s how many employees in each workgroup received a WARNING notice, and what percentage of each workgroup it represents:
- 9,950 flight attendants, representing 37% of the working group
- 4,500 fleet service employees, representing 26% of the working group
- 3,200 maintenance employees, representing 22% of the work group.
- 2,900 passenger service employees, representing 30% of the working group
- 2,500 pilots, representing 18% of the working group.
- 1,000 reserve employees, representing 23% of the working group
- 175 office employees, representing 36% of the work group
- 50 flight crew training instructors, representing 15% of the task force
- 10 flight simulator engineers, representing 7% of the working group
18% of pilots received WARN notices
American Still Waits For More Government Help
The letter to employees also points to the potential for the government to extend its Payroll Support Program for another six months, which would delay any layoffs. The airline expects demand to pick up more by next spring, which means fewer layoffs will be needed.
Employees are encouraged to work with unions to make their voices heard for increased government support:
“It is worth noting that each of our unions has expressed support for legislation that would expand funding for the Payroll Support Program for six months in light of the far longer impact of the pandemic than anticipated when the CARES Law As currently proposed, the effect of this legislation would be to delay any involuntary license until March 31, 2021, at which time there would surely be more demand for air travel and, along with that demand, much less need for involuntary licenses. throughout the country industry.
This is a union-led initiative across our industry, but American supports any legislation that protects 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 that your voice is heard. The fact that an extension of the Payroll Support Program is being considered illustrates the incredibly important work that you all do every day in our country and in the world. Notably, each direct job at an airline supports 13 additional jobs that support our aviation infrastructure and industry. “
Could the government extend support to airlines?
Bottom line
American Airlines has issued around 25,000 WARN notices, as the company anticipates having to suspend employees starting Oct. 1. These figures are higher than expected a few months ago, but again, the recovery in 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 has 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 American airlines during the pandemic, and we can expect that to continue.
It’s also worth noting that WARN’s notices will not necessarily directly reflect how many employees will be suspended in October.
I will be curious to see if the government promises more support. I feel bad for all the airline employees who face so much uncertainty right now (as is the case with so many industries, for that matter).
