By accepting federal aid under the Payroll Support Program portion of the CARES Act, U.S. airlines agreed to maintain payrolls and service to existing markets through at least Sept. 30. American Airlines Group (NASDAQ:AAL) has been among those that have been seeking voluntary employee buyouts and planning for potential layoffs come October.
American has now also detailed service reductions it will impose beginning Oct. 7. The airline announced today that it will suspend service to 15 small markets until at least Nov. 3, once the CARES Act commitment expires.
Cities on the list include Greenville, North Carolina; New Haven, Connecticut; and Williamsport, Pennsylvania. And this list may be just the beginning of changes. The company said, "This is the first step as American continues to evaluate its network and plans for additional schedule changes in the coming weeks."
Airlines have been struggling to cut costs and slow cash burn as the coronavirus pandemic continues to limit customer travel. American had said it was going through $100 million per day in April. By the end of June, that cash burn was down to $40 million per day. It said it plans to be at a zero cash burn rate by the end of 2020.
Modifying flight schedules to more closely follow demand and the announced suspension of service to these markets are ways to minimize losses. The company noted that an extension of the Payroll Support Program is under deliberation, and said it will reassess plans as needed depending on the outcome.