American Airlines and Federal Aid Package for Carriers

Airlines in the U.S. and elsewhere are struggling to deal with the coronavirus pandemic. This is not a surprise, as the pandemic continues to affect the industry. Companies are trying to stay afloat despite all challenges. As can be seen from the example of American Airlines it will be tough to cope with problems.

One of the world’s largest airlines will cut 19,000 employees in October. As a reminder, the federal aid that protected those jobs expires next month. It is worth mentioning that, as part of the federal aid program, airlines are not allowed to reduce the number of employees through September 30. The budget for the federal aid package for carriers is $25 billion.

However, as the federal aid program will expire in less than two months, companies will have to adapt to the new reality. Unfortunately, demand only modestly recovered. As a result, companies have to adjust their operations.

Based on the information provided by the company, its fourth-quarter capacity will be half of what it was a year ago. Moreover, international long-haul flights will be at just 25% of its 2019 schedule.

Notably, the Texas-based airline employed more than 140,000 people in March. However, American Airlines expects to have 40,000 fewer employees in October compared to pre-COVID 19 periods of time.

American Airlines and coronavirus pandemic

It is worth mentioning that, the involuntary cuts include furloughs of 17,500 union workers, including flight attendants, pilots, and mechanics. Moreover, the company will eliminate 1,500 administration and management jobs.

American Airlines is not the only major airline that is struggling to cope with problems. For example, Delta Air Lines plans to furlough 1,941 pilots unless it can reach a cost-cutting agreement with the labor union.

United warned 36,000 employees last month that their jobs are at risk. However, the impact of voluntary programs on final numbers remains unknown.

Interestingly, Southwest Airlines doesn’t expect to cut jobs in 2020 because more than a quarter of its employees signed up for some kind of voluntary leave or buyout. Moreover, about half of Spirit’s 2,500 pilots will work fewer hours to avoid furloughs this fall.

Labor unions as well as airlines asked lawmakers to provide another $25 billion in aid. This way, it will be possible to preserve jobs through March 2021. Importantly, both parties supported this idea. However, Congress so far failed to reach another national coronavirus aid package that could include the additional relief for airlines.

The extension of federal aid will save thousands of jobs. This week, American’s labor unions asked Congress one more time to approve the aid to preserve jobs.

The company plans to furlough more than 8,000 flight attendants out of 25,000 cabin crew members.

American Airlines as well as other airlines tried to limit the involuntary cuts by urging employees to take buyouts. Moreover, the company offered other options as well. For example, early retirements and unpaid or partially paid leaves. U.S. lawmakers should approve another federal aid program, as thousands of jobs are at risk. They should take into consideration that, due to the ongoing situation, find employment will be tough.