In the fourth quarter, after CARES Act payroll restrictions lift and airlines can furlough employees, American Airlines plans to operate less than 50% 2019 flying and just 25% of international. They simply have too many people for so few flights, because there isn’t nearly as much demand for air travel.
The airline has calculated that they need 40,000 fewer employees compared to a year ago in order to operate this fall. And they’ve worked out the number of furloughs to take place October 1, detailing them by work group.
- October voluntary leaves total 11,000.
- American says 12,500 employees have taken early outs. This includes 30% of management employees though, which were effectively terminated – most of whom took better future travel benefits and some frequent flyer miles to call it voluntary.
- American says “approximately 19,000 of our team members will be involuntarily furloughed or separated from the company on October 1”
In addition to “approximately” 1500 management and support staff layoffs, the total furloughs by unionized work ground are 17,162. Ultimately this is substantially less than the 25,000 WARN Act notices the airline sent out.
For flight attendants this reaches down to July 1, 2013 – Seniority # 18,147, after 1610 voluntary early outs and 2890 extended leaves of absences avoiding furloughs of a full 10 years of hires.
In Doug Parker’s letter to employees he then spends a couple of paragraphs hoping for another government bailout – even though he acknowledges that the purpose of the first one was to keep employees tied to the airline so that everyone was ready to go when the world had recovered from Covid by the fall. He’s on record saying that the airline will not recover to past levels in 2021 no matter what happens with Covid.
Here’s the full message from CEO Doug Parker and airline President Robert Isom:
Dear fellow team members,
We have come to you many times throughout the pandemic, often with sobering updates on a world none of us could have imagined. Today is the hardest message we have had to share so far – the announcement of involuntary staffing reductions effective Oct. 1.
As you all know, the Payroll Support Program (PSP) of the CARES Act protected our team against involuntary separations through Sept. 30. It also ensured that we and other airlines continued to serve each of the markets we flew prior to the crisis. It was an incredibly effective piece of legislation. By providing airlines the funds to pay much of our team member salaries and benefits, it ensured the commercial airline industry kept flying in the face of very low demand for air travel and kept our country moving, with all markets continuing to receive safe and efficient commercial air service.
The only problem with the legislation is that when it was enacted in March, it was assumed that by Sept. 30, the virus would be under control and demand for air travel would have returned. That is obviously not the case. Based on current demand levels, we at American now plan to fly less than 50% of our airline in the fourth quarter, with long-haul international particularly reduced to only 25% of 2019 levels. So, as Sept. 30 approaches, we have announced reductions in service, including the complete elimination of service to certain markets in early October, and today we are announcing the related reductions in our workforce.
In short, American’s team will have at least 40,000 fewer people working Oct. 1 than we had In short, American’s team will have at least 40,000 fewer people working Oct. 1 than we had when we entered this pandemic. when we entered this pandemic. We have worked to mitigate as many involuntary reductions as possible through voluntary programs. Across the mainline and regional carriers, more than 12,500 of our colleagues have made the difficult decision to leave the company permanently through early out programs or retirement. Another 11,000 team members have offered to be on a leave of absence in October. These are important life decisions and we respect and greatly appreciate the sacrifice these team members have made, and continue to make, for American and their fellow team members.
Even with those sacrifices, approximately 19,000 of our team members will be involuntarily furloughed or separated from the company on Oct. 1, unless there is an extension of the PSP. Furlough numbers by workgroup are provided below. Each group is in a different situation. For example, since international flying is being reduced more than domestic service, groups that are staffed more heavily toward international service may see a larger impact. Your individual leaders will be sharing more in the days ahead.
The one possibility of avoiding these involuntary reductions on Oct. 1 is a clean extension of the PSP. Led by your labor unions, with the support of the industry, we have generated enormous bipartisan support for such an extension. The overwhelming majority of members of both the U.S. House and Senate appreciate that saving jobs in the airline industry through this crisis will mean a quicker economic recovery in the months and years ahead. And that preserving these essential service jobs will also mean continued commercial air service to all communities, small and large.
But, despite this broad bipartisan support, a PSP extension is tied up in a larger COVID-19 relief package, which our elected officials haven’t yet been able to negotiate. So 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, especially to smaller communities. If you haven’t already done so, you can let your elected officials know just how important a PSP extension is to you, your families and our economic recovery.
The coming weeks and months will be some of the most difficult we have ever faced. 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. Until then, take heart that we will get through this together. The professionalism and care this team has shown over the past six months has been nothing short of extraordinary. We are all American Airlines, and we will survive, and one day, thrive again. Thank you for all you are doing now, and tomorrow, to carry us through.
I don’t believe this for a second. This is an attempt by American to either get another another subsidy from Uncle Sam or union concessions; perhaps both.
Honestly, I really like the tone and determination that comes through in Doug’s message. If I worked for them (I don’t) I’d redouble my efforts and do my best.
It does not make much sense for taxpayers to continue paying the wages of unneeded airline employees. The gov’t should ensure the airlines survive, and they seem to have accomplished that. The survival of the major airlines is good for the country, and will also be good for the furloughed employees once the epidemic is over, which is extremely likely by sometime next year (unless this respiratory virus behaves differently than any other respiratory virus ever). The furloughed employees will have jobs to go back to in the next couple of years. There is nothing fundamentally wrong with the US airline industry; they just have the terrible luck of suffering from an unusual, deadly virus that our country has overreacted to and crashed segments of our economy for little benefit. In the meantime, these workers should do something else with their lives, if they want to. Sure, it’s a bad break, but we all know that luck plays a role in life. This doesn’t look like the worst luck ever. Others will suffer more. There’s no reason to favor airline workers over other displaced workers.
There is also no way to set a magical date when all these airline employees will be needed. Like it’s obvious that with the Sunbelt COVID spike winding down (likely due to seasonality — something the media doesn’t even report on) there won’t be much COVID in America next month. You can make a reasonable bet that this trend will continue through Fall. But even if you know that, how do you predict traffic levels? How do you know how fast corporate travel will rebound? How do you know when int’l borders will reopen? And then you get back to winter, when it is certainly possible that COVID could return in some form to the north. There’s no way to predict how much COVID the north will get and there’s especially no way to predict the possible overreaction to new cases by our federal government or state governors. Given this uncertainly, it’s better to let the market sort out airline demand, rather than setting an unrealistic and unknowable date for airlines to be back at full employment.
Instead of a another bailout, I’d much rather see job retraining programs.
Not a shock at all. United, Delta and others are saying the same thing – all that changes is the numbers. The fact is airlines (all of them) will be significantly smaller coming out of COVID (even after a vaccine) than before and they have to right size the workforce as well as make choices of cutting unprofitable routes. That is the only way to survive. Very tough for employees being let go and cities that may lose air service but there is not another option.
I agree w Parker that recovery will be a couple of years out (if then). Even if a vaccine is magically available 1/1/21 and everyone were suddenly immune to COVID (I expect to happen for many over the first half of 2021 but no way by beginning of the year) you have a number of factors what will adversely impact air travel for years to come including:
– Even if COVID is behind us there will be people that remain fearful of disease and avoid (or minimize) air travel as a result.
– Patterns are changing in that many people have learned to stay at home, take road trips, etc and I see this continuing for some time. Sure there will be many, myself included, that hop on a plane as much as I did before but I would argue we are in the minority.
– Businesses won’t get back to the level of travel (which are the most profitable tickets for airlines) for years (if ever). Use of MS Team, Zoom and other collaboration software, plus changing dynamics of work from home to minimize office space cost will contribute to permanent reductions in overall business travel. At a minimum I suspect travel cost will be very closely managed to ensure there is value and you may see 5 people going to that convention instead of 15-20.
– Finally, many have been hit hard financially by this and it will only get worse as layoffs become permanent, 8-10% unemployment is here for a while and people worry about losing their home/apartment. There just won’t be as much money for discretionary travel as before.
In summary, AA may be making this announcement today but worldwide there will be hundreds of thousands let go from airlines and other travel related businesses. No way around it!
What’s the big deal? Just learn to code.
Am I the only one wondering how overstaffed the airlines were before coronavirus? Especially at highly unionized airlines. And how much unnecessary middle management were there? I know before coronavirus it was common to see two Delta agents at the departure gate for most flights. Now I only see one on the 15 or 20 flights I’ve taken since March. In Europe, many of the airlines long ago implemented electronic boarding gates. This would easily eliminate one of the two jobs at gatehouses. Same for airline lounges. Do they really need to pay people to sit at the entrance and scan tickets to admit customers? Delta used to have two separate desks. Three or four agents admitting customers and two or three agents working on rebookings, ticket issues, etc. They’ve been merging these functions at redesigned clubs. What about flight attendant to customer ratios? With no in-flight service, most of the flight attendants are doing nothing. Didn’t United recently eliminate one flight attendant from long-haul flights? If you could eliminate one or two flights from economy for mainline flights that’s a potentially significant savings.
@AC, the stock market disagrees!
Historically, we have always overestimated the impact of technological tools. In the future, most business will continue to be conducted in person. It’s another way to find leads and establish trust. We aren’t 100% rational when we select a business partner. Support roles (technical etc) will not need to be done in face-o-face. Ultimately, we know that business is back to “normal” when physical conferences take place again. Try attending a Zoom conference and you’ll see how poor they are for business. Physical conferences can not be replaced.
What is very telling is that in the breakout no mention is made of Management/Specialist employees, most especially the hundreds of non productive staff holed up in the new expensive Headquarters building. While this group is always bloated, the merger with USAir added far more than would be in place prior to that. As usual, these are disproportionally protected while the front line staff who deal with the customers is gutted.
Sadly, that’s what the employee groups got when they fell for the “snake oil” sales job Parker and company sold them to get the merger approved.
@chopsticks says:”Like it’s obvious that with the Sunbelt COVID spike winding down (likely due to seasonality — something the media doesn’t even report on) there won’t be much COVID in America next month.”
As people get older, memories become more selective. In late winter/early Spring, chopsticks’ sources said that as it gets warmer, the Covid would go away. So, what is it? Does if go away in the winter or summer? Or, has it proven, it is impervious to seasonality?
@chopsticks So the country has in your words “overreacted to and crashed segments of our economy for little benefit”. Sure, you over simplified a-hole. 177, 000 dead is overreacting. Stick your head in my neighbor’s door who is suffering from Covid and see how you like it, but better yet join chump’s administration. You would fit right in with Nicki Haley you freaking a-hole.
@Rog
I hope Parker (CEO) is one of the 18,000.
I will offer one million of my AA miles if I can be the one to hand these furlough documents to any and all flight attendants that worked DFW-hkg in first or business over the last two years. I can’t make any promises but I will try to not laugh and snicker.
@chopsticks
“Sure, it’s a bad break, but we all know that luck plays a role in life.”
So the thing with this… airline health is cyclical, and you know that when you get into this business. Being on a seniority list at an airline is one of the last career choices you should make if you want “job security”, or have any ability to “earn” your job retention. First in, first out is how it goes, and beyond that, it’s “read the contract.”
Hence why some of us made other career choices. When your number is called and you’re told you’re furloughed, there’s nothing you can do. Them is just the shakes. (And for those who claim “it isn’t fair”. It’s the system. It’s so ingrained in how airlines operate that it is not a surprise. Also, good luck changing it.)
@VH the “Management/Specialist” Group (now called “Management and Support Staff“ or MSS) cuts were completed well over 6 weeks ago and also reported here on real time. They weren’t saved from this. By the way, the “new expensive” headquarters building (is there such a thing as a new cheap building?) is technically closed except for folks that cannot work remotely.
The concept of a 300 acre corporate headquarters campus bringin everyone together, is fantastic from a culture standpoint. Excelt probably lacked the foresight to consider no matter how good the industry is, it is still the airline industry and something can happen. Indeed it has.
@Alan The reality is that while we have great data analysts, most of our public health officials have been lackluster in their knowledge and advice. For instance, they failed to warn us of the possibility that there were 2 COVID seasons in America: north and south. It turns out that many virologists were aware of this possibility — especially since the great Hope Simpson figured this out for flu last century — but nobody passed this information along to the public until the data started showing it happening. Whoops! So we lost 2 months of COVID recovery as the Sunbelt had to go through what the north experienced, albeit in much milder form. But the COVID infection curve is now collapsing in the south (mimicking the north, because COVID works the same everywhere), so unless you enjoy telling people “WE”RE ALL GOING TO DIE,” I might suggest looking at the data and drawing a rational conclusion.
@ Dan I can certainly understand why people would choose careers other than the airline industry. That said, this furlough is different from those experienced in the airline industry a decade (or more) ago. Back then the industry was far more sensitive to economic fluctuations, and wasn’t properly adapted to a deregulated environment (which is why the airlines always lost money then and didn’t lose money before COVID). It is highly unlikely the US airlines will return to unprofitability after COVID leaves, and there’s never been a respiratory illness that has lasted more than 2 seasons. So the airlines should be growing against next year and beyond. I’d like my chances on that furlough list, although it obviously will be harder for the folks on the bottom of the list.
@chopsticks
LIfe is usually tolerable at the major airlines… if you can get there. The truly sucky part is the “getting there” part. You gotta cut your teeth at the regionals, and that’s hard. The flying public sees “United Express”. What they don’t see is Express Jet losing all their flying, CommutAir picking up the planes and rehiring the pilots as “new hires” at first year pay. *That* model has been going on for decades. (Given that, I’m surprised SkyWest has been able to hang on.) If you make it to the majors, you’re insulated from that phenomenon, but I’ve known regional pilots who have been “first year pilots” three to four times over, at the corresponding pay level.
@Dan –Yup, this situation sucks for those in the “minor leagues” trying to work their way up to the majors. Due to this unforeseeable disaster, there will now be thousands of furloughed employees in front of them. A horrible break. but life happens.
@mark Johnson considering HKG is highly desirable, very senior, it’s likely many of those flight attendants are not impacted by the furloughs.
I have to chuckle when I read comments like yours. I would never accrue millions of miles on an airline for which I had such blatant disdain, or any other business. It really questions your judgement that you continue to return to AA.
@jedipenguin
This is, by far, the most sensible comment I’ve seen on VFTW. If the past 20 years (9/11. Crash of 2008, Eyjafjallajökull , Covid-19), it’s that travel is seasonal (whether that season be a few months or few years), and, therefore, there will always be a need to reduce staff. Having an alternative skill set would stand people in good stead should this downturn happen. The FA in the UK ensures that football players spend a lot of their time at collage / studying, as the sport is normally, from a playing perspective, over for most people at the age of 40.
However, I do wish Doug had the balls to write what’s actually happening: “or separated from the company” is a cynical phrase written by someone with no spine
@Gary Did the pilot’s (AA, AW, US) finally agree to One Seniority List?
@DB – pilots seniority lists were combined for the legacy airlines
What about the expense of employees’ families flying for literally nothing … that might be a good way to cut expense … just paying the tax on a flight cost … especially now with lay offs and furlough … ground them also