American Airlines Tells Flight Attendants They’ll Be Laid Off Again, Third Government Bailout Requested

In December Congress passed a $15 billion airline payroll bailout, requiring airlines to bring furloughed employees back to work and pay everyone December 1 through March 31, 2021. That bill, pitched as “payroll support,” comes at an annualized cost at over $1.1 million per furloughed employee – the most expensive jobs program in history.

And it doesn’t even bring most employees back to work – it really does just pay unemployment.
At American Airlines, for instance, no flight attendant starts back before March 2, and only one-third will work at all before the end of March when the requirement for airlines to keep everyone on payroll in exchange for the money expires.

Over the summer American laid off 1500 management workers who didn’t take voluntary exit packages. Here’s how they’re avoiding paying non-union employees they let go, keeping more of the payroll money for themselves. American also furloughed 17,000 union employees. (This boosted the average flight attendant age to about 56.)

Now we’re about the start the whole thing over again. The American Airlines flight attendants union has been told by the company to prepare for another round of WARN Act notices which are required in the event of mass furloughs,

[D]ue to growing uncertainties in both international and domestic demand, we might again find ourselves overstaffed. As a result, the Company may be sending a second round of WARN letters to employees across the Company.

American Airlines is only spending $300 million of the $3.1 billion received from “Payroll Support Program 2” according to airline President Robert Isom in the airline’s January earnings call (“the number added back to salaries is about $300 million, which is the amount of money that we will have higher salaries due to PSP2 coming back.”). Yet despite all this government cash to keep people employed they do not plan to do that.

As the second government airline bailout was signed flight attendants began pushing for a third bailout. I’m not sure how management keeps hoodwinking them into fronting for this, when equity and debt holders are keeping 90% of the money.

The head of AFA-CWA (which represents United Airlines flight attendants among others) and the APFA (which represents American’s flight attendants) wrote a letter to the President and Congressional leaders asking for another $15 billion for airlines. Credit to J.P. Morgan Chase’s Jamie Baker who told investors in October to bank on the second bailout and expect a third request as they considered how to value airline stocks.

Southwest Airlines promised to spend about one-third of its second bailout on employees they would have furloughed, so that they’re already not going to furlough anyone in 2021. Delta hasn’t furloughed any employees, but as a result of each bailout they both receive billions of dollars ostensibly meant to pay furloughed employees anyway. So yeah, let’s go for round three.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. If regular PPP loans require people to use up the funds before being eligible for a 2nd PPP loan, airlines should be required to use up their funds too.

  2. This is ridiculous – United and American just fleeced the American taxpayer even worse than the bailout was intended. Based on the numbers above, AA is just flat out pocketing $2.8B. Let them fail and restructure, the hope that the airlines will ever be close to their 2019 selves in laughable.

  3. At least United (Scott Kirby) was upfront in its December letter to employees calling PSP2 a “temporary” recall and for those folks to expect to be refurloughed again on April 1. It was a disservice by AA (Doug Parker) to be silent on this and give recalled employees false hope that PSP2 was the magic bullet that would bridge them to demand recovery and being back on payroll for good.

  4. I do NOT want to get into politics. Suffice it to say that I am more in line with Biden than Trump. BUT – this one thing almost had me vote GOP. I see the Dems voting a 3rd bailout, then a 4th and so on. This stuff makes me sick.

  5. There is only one reasonable solution to avoid subsequent bailouts. Give each of the airlines a monthly stimulus check of $1B to spend as they wish.

  6. Why do they do this? Because they can. This is why you have high priced lobbyist in Washington and contribute to campaign funds. It’s disgusting. Washington is a big swamp.

  7. This program, like many gov’t programs, is stupid and wasteful. That said, if management isn’t maximizing the benefits from the gov’t largesse to keep their company afloat, they are bad managers and should be replaced. Right?

  8. Politics as usual but at least the “Creature from the Black Lagoon” is gone. Anything is better than the chump Covid idiot.

  9. Allen Franklin, the last 2 airline bailouts were done with a Republican president and Senate. Let’s tell it like it is- the airlines have strong lobbies in Washington period. I flew internationally for Pan Am for 10 years and loved seeing the world, but I had a useable college degree when they were in financial trouble, I bailed out. You don’t have to be a brainiac to learn airline procedures. American Airlines F/As are youngest 56 years now. They should have been more congnizent that you can’t do this job forever. Not trying to be against older people being in F/A positions just being realistic that there are some jobs that require youth. I don’t want a 65 yr old trying to save my life. You get a usable degree before or after you become a F/A to take care of yourself not get hand outs from taxpayers.

  10. Plain and simple, Parker and AA….err USAir on steroids’ …deserve yet another mega Golden Fleece award. Maybe it should be renamed TGTRO&F trophy….The Golden Taxpayer Rip Off & Fleece prize….two down and ??? to go.

  11. They have poor customer service to begin with. No wonder they aren’t giving refunds on cancellations. I hope they go belly up!

  12. Once again, a half-researched, and mostly false article from View From The Wing. It is almost funny how bad these articles are, but sad how some people believe any of it. When will people learn to not believe this garbage on the internet?!?!

  13. @Jonathan Watson – funny, you can’t actually identify anything that is false in this piece. Maybe at least TRY to argue something here is factually incorrect?

  14. @Gary,

    First off that “the number added back to salaries is about $300 million” quote had no context and wasn’t even Robert Isom it was Derek Kerr!

    Secondly when AA receives 3.1 billion to cover the entire payroll for the quarter under the condition they need to add the 10% of your payroll they recently furloughed back to said payroll ledger you end up adding 300 million the total payroll bill being covered….That is the context, easily explained.

  15. @Don77 – from the transcript – I don’t recall who said it, I was attributing to Isom because that’s how it appears in the transcript.

    “Robert Isom

    Yes. And Savi, the answer – I mean, the one number that we do know is the number added back to salaries is about $300 million, which is the amount of money that we will have higher salaries due to PSP2 coming back. ”

    And yes – they spend the money on payroll – but the point is that they’d have spent almost as much whether the government had given them money or not. The relevant question is, how much does it cost to cover furloughed employees? And the rest is money they pocket, since it’s money they were already spending.

  16. @Gary

    Yes but that is what the PSP was designed to do (cover 75% of 2019 payroll) however you represent it as if American was doing something underhanded, no it did not…it was doing exactly as was intended by our crazy politicians….. I for one think it’s time to realize the absurdity of spending $25B to “save” 30,000 odd jobs for 3 months and let the market downsize temporarily and have weak corporations die off or enter restructuring. People should be blaming the politicians but your article is meant to prime outrage towards the airline managements, most specifically AA (which ironically is the one with the most significant amount of furloughs of any US carrier).

    And it was Derek Kerr who answered that at 29:02 of the earnings call… wrongly attributed to Isom on your transcript apparently.

    Derek Kerr:
    Yeah. And, [inaudible] to the answer, the one number that we do know is the number added back to salaries is about $300 million dollars, which is the amount of money that we will have higher salaries due to PSP2 coming back. The other is volume.

    I guess we will agree to disagree on that one.

    Respectfully

    Dan

  17. @dan – what American is doing is *legal* but morally reprehensible, picking taxpayer pockets for their own benefit. Parker spent months in DC lobbying for this, they aren’t just passive beneficiaries of misguided policy. What’s more Parker has made dishonest arguments (‘this is just a pass-through to workers” “this keeps everyone ready to work until recovery happens” “without this vaccines can’t be transported”) to advance this policy.

  18. @Gary

    Again how is that different than any other major airline in the U.S.? The airlines lobbied as a group along with ALPA and AFA and got their payroll (mostly) covered, regardless of their intention to furlough. JetBlue received $252 million of taxpayers money under PSP2 yet they never furloughed anyone, are they just as morally reprehensible?

    Agreed it’s a waste of taxpayers’ money (there’s a lot of that going on these days). PSP1 was understandable by protecting the airlines from what was thought would be a short term shock, but the talk of a 3rd PSP is ludicrous!

  19. @Dan777 – American and United are talking up April furloughs while keeping most of the anti-furlough money for themselves.

    And note that I draw a contrast with Southwest which at least took PSP2 and promised not to furlough anyone in 2021, even though they legally can do so.

    Parker was most visible camping out in DC working Capitol Hill most days for months.

  20. I took the retirement in Oct 2020 from AA–42 years! Didn’t want to but they scared the ____out of us as to the future! I’m so sorry we were pushed to this limit–but the company has always been less than truthful with us to say the least and at least I’m out of it! I saw the smoke and mirrors in the last 2 months as Doug told employees that they would avoid any more furloughs–how?? 3 months at a time of payroll support or even 6 months dosen’t warrant bringing all employees back and then a month later giving them WARN letters again. So sorry for everyone!
    The flight attendants work very hard and are being shuffled all over the place– at the end, like for me, its a very small pension and thats what I was most concerned about–that they will eventually get rid of this–(in bankruptcy it shrunk) so I was of age. Will always love my job and the people–but all I can say is thank God they still have a union……

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