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American Airlines to furlough 19,000 workers when federal aid ends

Aug. 25, 2020
3 min read
American Airlines to furlough 19,000 workers when federal aid ends
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American Airlines will layoff 19,000 workers in October as federal payroll aid expires.

American announced the move Tuesday in a memo to employees from CEO Doug Parker and president Robert Isom. The move will affect about 17,500 frontline workers and another 1,500 — previously announced — from the company’s management.

"We have come to you many times throughout the pandemic, often with sobering updates on a world none of us could have imagined," Parker and Isom said in the memo. “Today is the hardest message we have had to share so far – the announcement of involuntary staffing reductions effective Oct. 1.”

American had already warned last month that it could be forced to lay off up to 25,000 workers if Congress did not extent the payroll protection aid program that currently helps U.S. carriers covers workers’ salaries.

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But that funds from that program expire Sept. 30, and American says it will need dramatically fewer employees to run its operation as travel has plummeted amid the pandemic.

Already, nearly 23,000 American employees had committed to leaving the company – either through early out and retirement programs or through an unpaid leave of absence. But that was not enough to prevent the involuntary furlough of tens of thousands more, the carrier said.

“In short, American’s team will have at least 40,000 fewer people working Oct. 1 than we had when we entered this pandemic,” Parker and Isom said in their letter. “We have worked to mitigate as many involuntary reductions as possible through voluntary programs.”

Another aid package? Should Congress dole out more money for airline employees? The case for and against

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“Even with those sacrifices, approximately 19,000 of our team members will be involuntarily furloughed or separated from the company on Oct. 1, unless there is an extension of the (Payroll Support Program),” they added.

American already has drastically cut its schedule, and it’s route map is set to shrink too.

The carrier said last week that it will drop 15 cities from its route map – destinations ranging from Williamsport, Pennsylvania, to Roswell, New Mexico – as other aid package funds and requirements expire.

As for the layoffs, American didn't paint an optimistic picture, but did say a glimmer of hope remained.

"The one possibility of avoiding these involuntary reductions on Oct. 1 is a clean extension of the PSP," Parker and Isom said. "Led by your labor unions, with the support of the industry, we have generated enormous bipartisan support for such an extension."

Elsewhere: Southwest Airlines is cutting more than 100 routes from its ‘full’ schedule this winter

But a work on a new aid package remains bogged down in Congress. It's prospects are uncertain, at best. And even if Congress does act to pass another aid package, it's uncertain if there'll be another lifeline thrown to airlines.

"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," wrote Parker and Isom.

Featured image by AFP via Getty Images

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TPG Editor‘s Rating
Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
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If you are looking to take your premium rewards to the highest level, this card is really a no brainer in our eyes. Chase's Ultimate Rewards make points easy to redeem, with a wide range of 10 airline and three hotel transfer partners and a friendly user interface. Despite the high annual fee, Chase is consistently adding new benefits to keep the card competitive in a fierce premium rewards field.

Pros

  • $300 annual travel credit as reimbursement for travel purchases charged to your card each account anniversary year
  • Access to Chase Ultimate Rewards hotel and airline travel partners
  • Unlimited 3x points on the broad category of travel and dining
  • 50% more value when you redeem your points for travel through Chase Ultimate Rewards®
  • Broad definitions for travel and dining bonus categories

Cons

  • Steep $550 annual fee
  • May not make sense for people that don't travel frequently
  • You must spend the $300 travel credit before earning 3x points for travel and dining
  • No automatic hotel elite status
  • Earn 80,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $1,200 toward travel when you redeem through Chase Ultimate Rewards®
  • $300 Annual Travel Credit as reimbursement for travel purchases charged to your card each account anniversary year.
  • Earn 5x total points on flights and 10x total points on hotels and car rentals when you purchase travel through Chase Ultimate Rewards® immediately after the first $300 is spent on travel purchases annually. Earn 3x points on other travel and dining & 1 point per $1 spent on all other purchases
  • Get 50% more value when you redeem your points for travel through Chase Ultimate Rewards®. For example, 80,000 points are worth $1,200 toward travel
  • 1:1 point transfer to leading airline and hotel loyalty programs
  • Access to 1,300+ airport lounges worldwide after an easy, one-time enrollment in Priority Pass™ Select and up to $100 application fee credit every four years for Global Entry, NEXUS, or TSA PreCheck®
  • Count on Trip Cancellation/Interruption Insurance, Auto Rental Collision Damage Waiver, Lost Luggage Insurance and more