American Airlines warns 13,000 employees to prepare for furloughs

Photo (c) James Leynse - Getty Images

The company says it will need to make cuts when federal aid runs out in March

American Airlines told its employees that when the federal aid it’s been living on expires on March 31, as many as 13,000 workers will likely be furloughed if labor unions are unable to raise more emergency funding from the government.

The $15 billion Payroll Support Program (PSP) package Congress approved for domestic air carriers in late 2020 required airlines to recall all employees they furloughed in the fall and maintain payroll through March 31.

American’s peer United Airlines also sent furlough warnings to 14,000 staff members last week.

Even pilots are affected

The furlough notices covered every aspect of American’s workforce, including 4,245 of its flight attendants, 3,145 fleet service workers, 1,850 pilots, 1,420 maintenance workers, 1,205 in passenger service, 100 dispatchers, and 40 flight crew training and simulator pilot instructors, according to an American Airlines securities filing.

American is the only major U.S. carrier to furlough pilots. Delta, United, and Jetblue previously cut deals with pilot unions that kept the pilots' jobs in place in exchange for reduced flying or pay. Southwest told its pilots that they also run the risk of being furloughed in March or April. 

In its filing, American also announced that it will open a voluntary early-out program (VEOP) and a long-term voluntary leave of absence (VLOA) program for the company’s U.S.-based team members, but not its pilots. The benefits offered through those programs include everything from non-revenue travel privileges and partial pay up to $150,000 in a Retiree Health Reimbursement Arrangement.

The Allied Pilots Association (APA), American Airlines pilots’ union, was thrown off by American’s move to furlough pilots. “Although we recognize (American Airlines) CEO Doug Parker’s efforts when he joined APA on Capitol Hill for PSP, today’s news does come with some head-scratching,” APA brass wrote in response to American’s announcement.

“While perhaps not unexpected due to near-term passenger demand, the announcement seems to contradict recent comments by President Robert Isom, who said during last week’s earnings call that, due to retirements, American would ‘be hiring pilots in the not-too-distant future,’ the organization said.

“We owe you transparency”

With constantly changing guidance and rules for travelers regarding masks, international travel, and COVID-19 tests, the airline industry probably suffers more pandemic-led economic turbulence than any other business sector. 

“The vaccine is not being distributed as quickly as any of us believed, and new restrictions on international travel that require customers to have a negative COVID-19 test have dampened demand,” American’s CEO Doug Parker and President Robert Isom wrote in a note to staff. “Please know that we will get through this period and to more stable ground — that is certain. And, we will continue to fight in every way possible to get there as soon as we can.”

“Until demand returns and we can provide permanent job stability, we owe you transparency. That is what we can offer today and what we will continue to provide. Thank you for all you continue to do for each other, our customers and our airline,” the officials said.

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