American Airlines is issuing a warning that 25,000 employees may be furloughed this fall due to coronavirus’s impact on travel demands.
What We Know:
- On Wednesday, American Airlines issued warning letters that almost 29% of U.S. based workers could lose their jobs on Oct. 1 as the federal requirements of the Payroll Support Program (PSP), which prohibited airlines from layoffs will expire. The airline employes 130,000 people globally – 25,000 could be affected. While the positive coronavirus rates rise in Florida, California, and Texas, other states and countries are enforcing self-quarantine rules and bans, impacting travel demands.
- To avoid layoffs, American Airlines has urged employees to take a new extended leave that can last up to two years or go into early retirement. CEO Doug Parker and President Robert Isom said the airline’s revenue in June was down more than 80% from a year ago and that they are expected to be overstaffed by more than 20,000 people in the fall if more people do not volunteer to go on leave or retire early.
- The Worker Adjustment and Retraining Notification (WARN) Act requires employers to notify staff at least 60 days in advance if they may be furloughed. The notices are going to be sent to 9,950 flight attendants, 3,200 maintenance workers, 4,500 fleet service employees, and 2,500 pilots.
- American is not the only airline that has issued warning letters to its employees. Last week United Airlines issued a warning that 36,000 employees, and almost half of its front-line US-based workers, could be furloughed in the fall. In October, several other airlines will layoff tens of thousands of employees as they will no longer be required to meet the federal requirements in the PSP Coronavirus Aid, Relief, and Economic Security (CARES) Act. American Airlines, United, along with several other airlines – Delta, Southwest (LUV), Alaska (ALK), and Jetblue (JBLU) – all applied for a new round of loans available under the CARES Act, the Treasury Department announced.
The airlines have already received $25 billion in aid and this new round of loans could mean another $25 billion. The terms of the first $25 billion in federal aid prohibit airlines from furloughing employees until Oct. 1.
