American Airlines Group Inc. will cut 19,000 workers once federal payroll aid expires as scheduled on Oct. 1, capping a 30% workforce reduction since the coronavirus pandemic began to torpedo travel demand.
About 17,500 employees will be furloughed, meaning they are eligible to be called back when conditions improve, while 1,500 previously announced cuts to management staff will take effect, the airline said in an email Tuesday. American is the first major carrier to disclose the extent of shrinking operations to adjust to passenger numbers that are down 70% from last year.
American’s plan heralds thousands more job cuts at U.S. airlines after Sept. 30, when job protections linked to federal financial aid expire. Debate has stalled in Congress over a six-month extension of the government’s $25 billion payroll support program for passenger carriers, which would carry the same restrictions on workforce cuts. American said the involuntary job cuts could be avoided if lawmakers extend payroll support.
“We have come to you many times throughout the pandemic, often with sobering updates on a world none of us could have imagined,” Chief Executive Officer Doug Parker and President Robert Isom said in a letter to employees that was disclosed in a regulatory filing. “Today is the hardest message we have had to share.”
American fell 3.6% to $12.96 at 11:28 a.m. in New York, a day after airlines rallied on upbeat expectations for coronavirus treatments and vaccines. The shares tumbled 53% this year through Monday, with only United Airlines Holdings Inc. declining more on a Standard & Poor’s index of major U.S. carriers.
Based on current demand, American plans to fly less than 50% of its normal schedule in the fourth quarter, with long-haul international at only 25% of 2019 levels, Parker and Isom said.
The planned job cuts will lower American’s total employment to less than 100,000, compared with about 140,000 in March. About 12,500 workers have left voluntarily and 11,000 will be on leave starting Oct. 1.
The Fort Worth, Texas-based airline previously warned that as many as 25,000 workers could be laid off, while United put its number at 36,000.
Delta Air Lines Inc. said Monday that it will furlough 1,941 pilots, but hasn’t outlined changes for other employee groups. Southwest Airlines Co. has said enough employees took early retirement and leave that it will have no furloughs through the end of this year.
More than 150,000 workers at the four largest U.S. carriers already have taken early departures or agreed to temporary leave of various length.
