American Airlines will begin laying off 19,000 employees Thursday after lawmakers and the White House failed to agree on a broad pandemic relief program that includes increased federal aid for airlines.
CEO Doug Parker said Wednesday night that if Washington comes to an agreement for $ 25 billion in air aid “over the next few days,” the Americans will cancel the holidays and recall the employees.
The US decision represents the first (and probably the most important) involuntary jobs cut in the industry in the coming days. United Airlines has said it could lay off nearly 12,000 workers. Airlines employees and executives this week made 11th hour appeals to Congress and the Trump administration to avoid time off when a federal ban on layoffs, a condition of a previous round of federal aid expires Thursday.Passenger airlines and their unions are pushing for taxpayer dollars to pay workers for six more months, until next March. Their demand is linked to stalled negotiations over a broader pandemic relief measure.
Industry officials acknowledged that the outlook for action was grim ahead of Thursday’s deadline. They said, however, that they were acclaimed that the House this week included airline payroll aid in a $ 2.2 trillion relief plan that came close to the Republicans’ preference for a lower price.
“It gives a glimmer of hope that something will be done,” said Nicholas Calio, president of Airlines for America.
Treasury Secretary Steven Mnuchin said Wednesday evening that the administration wanted to help hotels, airlines and schools. He said he was speaking with House Speaker Nancy Pelosi, but hinted that the White House did not want to go over about $ 1.5 trillion – $ 700 million below the Democrats’ figure. Bedroom.
“I don’t think we’re going to make any significant progress” until Thursday, he told Fox Business.
Calio suggested that Thursday might not be a difficult deadline – airlines could cancel some leave if an agreement between the White House and Congress Democrats seems imminent.
“Ideally, if it goes beyond Thursday, they will be close to a deal and say, ‘Wait a few days’ and we can wait,’ he said. “Beyond that, the notices have disappeared and the holidays will come into effect.”
Sara Nelson, president of the Association of Flight Attendants, said she is still awaiting action from Congress, as majorities in the House and Senate have shown support for greater relief from airlines. She said a bailout that keeps airline workers in jobs would be cheaper for the government than putting them out of work during a pandemic.
“These are people who won’t be able to pay their rent, they won’t be able to take care of themselves,” Nelson told CNBC.
Beyond the American ALA,
et United UAL,
small airlines have sent layoff warnings to several thousand employees. Delta DAL,
and southwest LUV,
have lost thousands of jobs through voluntary departures, but don’t plan to lay off workers immediately.
Airlines have persuaded tens of thousands of employees to take early retirement or severance agreements. However, even after these offers, airlines have more pilots, flight attendants, mechanics and other workers than they need.
Critics say airlines shouldn’t get special treatment and subsidizing their workforce will only delay companies’ need to adjust to slowing travel, which even airline groups believe last three or four years.
“Airlines are always the first to ask for help. They are bailed out again and again, ”said Véronique de Rugy, a researcher at George Mason University and columnist for a libertarian magazine, in a recent interview. “Airlines have a habit of not preparing properly for the next emergency because they know they are going to be bailed out.”
In March, Congress approved $ 25 billion mostly in grants to cover passenger airline payrolls through September and up to an additional $ 25 billion in loans that airlines could use for other purposes. Late Tuesday, the Treasury Department said it had made loans to seven major airlines: US, United, Alaska, JetBlue, Frontier, Hawaiian and SkyWest.
American now expects to borrow $ 5.5 billion from the Treasury, and United can raise $ 5.17 billion. Airlines have also borrowed billions from private lenders. They could use that money to keep employees – as critics like de Rugy suggest – but they are trying to cut spending in case ticket revenues remain severely depressed for a long time.
Air travel to the United States remains down nearly 70% from last year. Signs of a modest recovery faded this summer as COVID-19 cases increased in many states. Traditionally lucrative business and international travel is even weaker than domestic pleasure flights.