Shrinking American and Delta outline initial coronavirus staff cut plans
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Fort Worth, Texas-based American aims to reduce its management staff by 30% — or by about 5,000 people — said executive vice president for people and communications Elise Eberwein in a memo to staff on Wednesday.
There was a similar announcement at Atlanta-based Delta. CEO Ed Bastian asked those who can go voluntarily to take early out offers in order to avoid involuntary furloughs and layoffs come October, he said in his own memo to staff on the same day. He did not put a number to how many people need to leave.
“I’m often asked for specifics about how small Delta will need to be over the next couple of years,” said Bastian. “The fact is, right now we simply don’t know.”
Staff at U.S. airlines are protected from involuntary furloughs and layoffs through Sept. 30 under the conditions of the federal government’s $2 trillion coronavirus aid package, known as the CARES Act.
Both American and Delta are operating a fraction of the flights they flew last year. In June, American will fly about a third of the number of flights it flew in 2019 and Delta will fly about 23% of the flights if flew a year ago, according to Cirium schedules.
Both airlines are adding flights back as travelers begin to trickle back onto planes. However, Wall Street analysts estimate that they could be anywhere from 30% to 50% smaller at the end of December than they were at the end of 2019.
“What I think you’re going to see is, in the summer of 2021, the collective U.S. airline business 10 to 20 percent smaller than in 2019,” said American CEO Doug Parker at the Bernstein Strategic Decisions conference on May 27.
How the staff cuts will impact travelers is unknown. Already, United Airlines has outlined plans to reduce flight attendant staffing on some flights, dropping to the minimum required by regulators, citing a need to control costs. This could impact onboard service quality if a flight is full.
In addition, smaller airlines could mean fewer long nonstop routes — for example between Washington Dulles (IAD) and Sacramento (SMF) on United — requiring travelers to change planes somewhere enroute.
American and Delta are not just cutting staff. The airlines have accelerated the retirement of more than 200 aircraft from their fleets, including four mainline types at American and three types at Delta. These moves are expected to save both airlines significant expenses.
At the same time, American could resume deliveries of new Boeing 787s and Delta of new Airbus A220s by year-end. Both jets feature some the airlines’ latest onboard offerings for travelers, while at the same time being more efficient to operate.
Featured image by Chip Somodevilla/Getty Images.
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