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American Airlines to Cut 40,000 Jobs Without a New Coronavirus Stimulus

By Lou Whiteman – Aug 25, 2020 at 12:11PM

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About half of the cuts would be involuntary furloughs.

American Airlines Group (AAL -0.07%) said on Tuesday that it expects at least 40,000 job cuts in early October, including about 19,000 involuntary furloughs, as the airline braces for falling demand and begins to adjust to life without government payroll support.

American and other airlines have been hit hard by the coronavirus pandemic, with travel demand down more than 70% year over year. But the industry has been able to avoid involuntary layoffs thanks to funding provided by the CARES Act stimulus legislation. The government provided $25 billion in payroll protection in return for the industry avoiding furloughs through Sept. 30.

An American Airlines tail at night.

Image source: American Airlines.

The deadline is approaching, and while lawmakers have discussed a fresh round of payroll support for airlines, the second stimulus bill is currently stalled in Washington.

American said new legislation would allow it to avoid furloughs, but said "we must prepare for the possibility that our nation's leadership will not be able to find a way to further support aviation professionals and the service we provide."

The airline expects to cut more than 12,500 of the 40,000 positions needed via early-retirement programs, and another 11,000 through voluntary leaves of absence. That leaves about 19,000 furloughs, including 1,600 pilots, 8,100 flight attendants, and 800 maintenance workers.

"The coming weeks and months will be some of the most difficult we have ever faced," CEO Doug Parker and president Robert Isom wrote in a letter to employees. "No matter how challenging they seem, remember this: The American Airlines team is no stranger to adversity, and in adversity, we always come through. We will come out on the other side of this crisis. Demand will return. Team members will be recalled. The world will find its new normal, and when it does, American is going to be there."

American had about 140,000 employees as of March.

The damage is hardly confined to American. Delta Air Lines (DAL 0.93%) late Monday said it will need to furlough up to 1,941 pilots in October without government aid or some sort of arrangement with union leaders on cost cuts.

United Airlines Holdings (UAL) said in late July that it might have to furlough as many as 36,000 workers, while Southwest Airlines (LUV -0.82%) hopes to avoid involuntary separations after more than 25% of workers volunteered to take buyouts or extended leaves of absence.

Lou Whiteman owns shares of Delta Air Lines. The Motley Fool recommends Delta Air Lines and Southwest Airlines. The Motley Fool has a disclosure policy.

Stocks Mentioned

American Airlines Group Stock Quote
American Airlines Group
$13.97 (-0.07%) $0.01
Southwest Airlines Stock Quote
Southwest Airlines
$39.75 (-0.82%) $0.33
United Airlines Holdings Stock Quote
United Airlines Holdings
$43.89 (%)
Delta Air Lines Stock Quote
Delta Air Lines
$35.71 (0.93%) $0.33

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