American Airlines To Lay Off 19,000 Employees With The Expiry Of Federal Aid

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American Airlines has announced that it will lay off 19,000 employees when restrictions under the federal aid package come to an end in September.  The job will be an addition to the voluntary departures and leaves that the company has reported since the pandemic broke out.  The world’s largest airline following the layoff will be left with 30% less employees than in March.

The pandemic has ravaged the travel industry

The COVID-19 pandemic caused countries worldwide to close their borders and impose lockdowns within their boundaries to curb the spread of the virus. With movement restricted, the Airline Industry came crumbling. Demand for both local and international travel took a nosedive. Airlines were forced to ground thousands of planes and a big drop in revenue.

The airline hired over 140,000 people in March. Under the $25 billion federal aid package, airlines are prohibited from laying off employees up to September 30. The package was unveiled to support airlines’ payrolls to avoid massive loss of jobs. It was meant to help carriers, whether through the pandemic.

But travel demand yet to fully recover, airlines are still struggling to sustain the payroll. With many planes, half-empty, airlines’ revenues have dropped to record levels. American has projected its capacity for the fourth quarter to be half of what it reported a year ago.

“Today is the hardest message we have had to share so far – the announcement of involuntary staffing reductions effective Oct. 1,” wrote American Airlines CEO Doug Parker and its president, Robert Isom, in a staff note announcing the cuts.

Other airlines also planning similar job cuts

Other airlines have also announced job cuts when the restrictions come to an end in September. Last week, Delta Air Lines announced that it will furlough 1,941 pilots if they don’t reach a labor union’s cost-cutting agreement. United has warned that up to 36,000 jobs could be lost as the pandemic continues to bite.

Airlines and labor unions are calling to approve another aid package for the airline industry. The package has already won bipartisan support, as well as the endorsement of President Trump. The roll-out of another $25 billion aid package for the airline industry has been delayed by failure to approve the second COVID-19 aid package. The airline package will be included.

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Neha Gupta
Neha Gupta
Neha Gupta has cleared CFA Level 2 from CFA Institute (USA). She has worked in diverse capacities from financial research to currency trading in a span of 10 years. Neha also covers technology, finance, retail, automotive, energy and other sectors news.