U.S. Airlines Beginning 32,000 Layoffs Amid Bailout Uncertainty

Two major United States (US) air carriers, American Airlines Inc. and United Airlines Inc. have decided to downsize the existing workforces since their hope for bailout support from Washington has faded away. As per the announcement of the two carriers Thursday, October 1, 2020, the total number of furloughs would be more than 32,000 workers in combine including some pilots to stay buoyant of the ailing airline companies.

The COVID-19 pandemic has crippled the airline industry due to the sudden restrictions of air travel worldwide to stop the spread of the virus. According to projections published on Wednesday by the Air Transport Action Group, the pandemic restriction had cost nearly 46 million jobs globally.

As a result of the impact, the U.S. airlines have reduced to its operation half and the country witnessed a decline of 68% in passenger travel volumes. Following the harsh outcomes, U.S. airlines have been seeking for another $25 billion in payroll support to protect jobs for a further six months once the current package, which banned furloughs, expires at midnight EDT.

Layoffs of 32,000 Employees

As per an agreement reached this week, American Airlines decided to furlough 19,000 employees including some 1,600 pilots while United Airlines planned to cut off over 13,000 employees with no effect on any pilots. In addition, several thousand other employees at other airlines including Delta Air Lines and Southwest Airlines have accepted buyouts or leaves of absence aimed at reducing expenses.

Earlier, U.S. Treasury Secretary Steven Mnuchin held talks with House of Representatives Speaker Nancy Pelosi to discuss a bipartisan pandemic aid plan, although some sources reported the plan made some progress. Yet, the government has not decided on the allocation of aid plans for now.

In a memo to employees, American Airlines Chief Executive Doug Parker said that the talks between Mnuchin and Pelosi included a large deal for the extension of aid rescue for airlines, which could confirm in the coming days. However, Parker stated, “Unfortunately, there is no guarantee that any of these efforts will come to fruition.”

Reduction of 13% of the Existing Workforce

The recent decision of the airlines would affect about 13% of their existing workforce on the basis of the strength before the pandemic. However, the two airlines told employees in memos seen by Reuters on Wednesday that the companies would reverse its layoffs decision once a rescue deal was announced by the government.

Association of Flight Attendants-CWA President Sara Nelson said in a statement that urged lawmakers to reach a deal, “Tomorrow, tens of thousands of essential aviation workers will wake up without a job or healthcare and tens of thousands more will be without a paycheck.” U.S. airline shares ended flat on Wednesday.

Similarly, Nick Calio, who heads the airline trade group Airlines for America, said earlier that the industry was still pursuing all potential avenues for new assistance from the government. Calio told Reuters, “People keep talking, but we need results,” adding “We are hopeful but not confident about them reaching a deal on a larger bill.”