The usually very reliable JonNYC, who has a lot of inside sources at major airlines but especially at American Airlines, relays a rumor that American will make an announcement at the end of the weekend of a complete shutdown for a period of 2-3 weeks. I am skeptical of this.
Rumors that AA will announce a complete shutdown of operations for 2-3 weeks. pic.twitter.com/k4OXKwlKRO
— JonNYC (@xJonNYC) March 21, 2020
To be sure there is very little demand for air travel right now, with load factors in the 20s or 30s, and American is likely losing money paying for crew and fuel (even at current low oil prices). There have also been discussions of a nationwide airline shutdown ordered by the government over the past few weeks.
A national airline shutdown has been heavily resisted, although selective travel bans would not surprise me going forward. For instance, I could see a ban on travel in and out of the areas most affected by coronavirus. That makes the greatest sense to protect those parts of the country where infections are still very limited. Or once the virus peaks and declines in one area, the government might seek to prevent a second wave by preventing travel to that area.
United Airlines is threatening mass layoffs at the end of the month unless there is a government bailout. That seems a much more effective strategy than actually grounding the airline while likely days away from a decision on a bailout. I don’t think doing so helps their case that they are viable if only the government gives them money.
Airlines For America today released a letter under the signatures of 10 airline CEOs to Senate and House leadership today indicating that “payroll protection grants.. equaling at least $29 billion” for “750,000 airline professionals” would prevent layoffs through August 31, 2020. (Incidentally, assuming a 60% reduction in operations as initially suggested by United is equivalent to 60% layoffs, that amounts to nearly $12,000 per employee per month.)
American Airlines can’t really front-run their bailout requests with layoffs now. And since it’s in American’s interest not to shut down completely pending a government bailout, I’ve assumed the rumors JonNYC is reporting on are false.
I reached out to American Airlines for comment. I didn’t think that if the rumors were true they would confirm it – but assumed in that case they’d ignore my request. Instead I received a swift reply: ‘We are not contemplating that at this time.”