A letter to American Airlines employees made public on Wednesday shows that the carrier may need to cut about 30% of administration and management jobs. The company’s management further warned that frontline workers may also have to go as the airline downsizes its fleet as a result of COVID-19.
Smaller operations for foreseeable future
In a letter to staff seen by Simple Flying, Executive Vice President of People and Global Engagement, Elise Eberwein, said that despite the bailout granted in the CARES package and additional liquidity raises, American Airlines must plan for smaller operations for the “foreseeable future.” Furthermore, it must cut its most significant expense – costs of compensation and benefits.
“Fleet retirement accelerations are underway, and we will fly roughly 100 fewer aircraft next summer — mostly widebodies — than we had originally planned,” Eberwein said. “Additionally, running a smaller airline means we will need a management and support staff team that is roughly 30% leaner.”
“Involuntary separation” declared in July
The groups of staff included in the 30% are those working in administration, marketing, planning, finance, and other similar functions. This is one of the few workforces that can be cut without the company going through unions.
American will begin by offering voluntary buyouts but will proceed to lay-offs if there are not enough takers. The “involuntary separation” will be communicated in July, but staff will remain on the payroll until September. There will be no severance for those who are let go, but they will retain flight privileges for a year.
The category of employees affected means that the airline’s headquarters close to DFW International Aiport could be hard-hit. Twelve thousand employees work in a new $350 million building meant to accommodate a pre-pandemic growing workforce.
Frontline workers to follow
Once support staff has been reduced, the airline will then look to frontline employees, including pilots and flight attendants. They will receive voluntary leave or early retirement options in June, so as to avoid involuntary furloughs. However, Eberwein was not overly optimistic about the outcome.
“This is a goal, though, not a commitment, and a stretch goal at that,” she said, adding that the airline would continue to work with union representatives in the weeks and months ahead.
Not allowed to lay anyone off until October
American is reportedly burning through about $70 million per day. However, CEO Doug Parker recently stated that filing for bankruptcy protection under Chapter 11 is not on the cards for his airline.
The Dallas-Fort Worth-based carrier is not allowed to let any staff go before the end of September, according to conditions stipulated in the CARES package. American received more than $10 billion in grants and loans and is requesting another 4.75 billion from the Treasury Department.
Fellow compatriot and rival United Airlines, bound by the same terms, has made similar estimates. It will also reduce 30% of administrative staff in cost-cutting measures going forward.