American Airlines revealed today that it would need to furlough approximately 17,500 US-based employees effective October 1st. On this date, the Payroll Support Program (PSP) part of the CARES Act, which has protected the US airline employees, ends. Let’s investigate further.
How many employees has American lost during the pandemic?
American Airlines, like any other airline company in the world, has faced a terrible 2020. The carrier has had to reduce its workforce. Until now, the company has achieved this by pushing early retirements and other initiatives through with its employees.
More than 12,500 American Airlines employees have left the company through early out programs or retirements. The airline has offered another 11,000 members a leave of absence from October.
Since the CARES Act was enacted in March, American Airlines’ employees have been protected from furloughs. But that protection is nearing its end. Doug Parker, American Airlines’ CEO said,
“The only problem with the legislation is that when it was enacted in March, it was assumed that by 30 September, the virus would be under control, and demand for air travel would have returned. That is obviously not the case.”
That being said, Doug Parker expects approximately 19,000 employees to be involuntarily furloughed or separated from the company. Nevertheless, American Airlines still assumes that there could be an extension of the PSP. Recently, airlines and crew unions have been pushing for a CARES Act 2.0.
“In short, American’s team will have at least 40,000 fewer people working 1 October than we had when we entered this pandemic,” added Parker.
Who will be furloughed?
According to American Airlines, the flight attendants’ workgroup is going to be the most affected by furloughs. The carrier expects to fire up to 8,100 flight attendants from October 1st.
The airline will also furlough 1,600 pilots, 2,225 members of the fleet service, 1,275 of the passenger service, 800 maintenance workers, 150 from dispatch, and 12 flight crew training and simulator pilot instructors. American also expects to furlough 3,000 employees from its wholly-owned carriers.
In comparison, Delta Air Lines is furloughing nearly 2,000 pilots in October. Meanwhile, in July, Southwest promised that it would not furlough any employee, at least in October.
“We have no intention of seeking furloughs, layoffs, pay rate cuts, or benefits cuts through at least the end of this year. We have never had any of these in our 49-year history,” Southwest CEO Gary Kelly said in a letter to staff.
“I can’t guarantee it will never happen, especially during these dark pandemic times. I can promise you it will be the last thing we do to keep Southwest financially healthy and viable,” Gary Kelly continued.
Could we see an extension of the PSP?
American Airlines has been warning for quite some time about the end of the PSP. Last week, it announced it would suspend services to 15 airports across the US after the payroll support ends.
Nevertheless, American Airlines is pushing for an extension of the CARES Act. As Parker said, the one possibility of avoiding involuntary redundancies is a clean extension of the PSP. The unions of American Airlines have generated enormous bipartisan support for an extension. But Parker remained pessimistic. He said,
“But, despite this broad bipartisan support, a PSP extension is tied up in a larger COVID-19 relief package, which our elected officials haven’t yet been able to negotiate.”
What do you think of American’s furloughs? Let us know in the comments.