American Airlines Warns of 25,000 Job Cuts
American Airlines announced some good news this morning for its customers, a partnership with JetBlue. But on the other hand, employees could be facing massive job cuts due to the effect of the pandemic on air travel.
The airline has warned about 25,000 front-line employees that they could be furloughed this fall. That accounts for roughly 29% of its U.S. mainline workforce. The airline is urging employees to take new extended leaves that can last up to two years or early retirement packages before having to involuntarily cut their jobs.
The news of job cuts is not surprising, as other airlines have announced similar measures. New coronavirus cases have cast doubt on a quick rebound in travel demand. At its lowest points, travel demand in the country was down 96% year-over-year. But in the last few weeks it was rebounded and is down just 73% from the same period a year ago. That is still a long way from normal and it has clearly affected the bottom line for airlines.
American’s revenue in June was down more than 80% than a year ago, CEO Doug Parker and President Robert Isom said in a note to staff, CNBC reports.
The reason that American Airlines is waiting until this fall to start job cuts is that airlines are prohibited from cutting jobs or pay rates through September 30 under the terms of $25 billion in federal payroll support. Some lawmakers and workers’ unions are calling for that aid to be extended through the end of March 2021.