American to Shrink Workforce by 40,000 on October 1

By Paul Riegler on 25 August 2020
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American Airlines said Tuesday that it expects to cut approximately 40,000 jobs at the start of October as the travel industry continues to feel the effects of the coronavirus pandemic.

The airline had 140,000 employees as of March 1 of this year.  This means that the airline will see a 28% reduction in its workforce come October.

Of the 40,000 departing employees, 19,000 will be as a result of involuntary separations that will go into effect on October 1, the day after the Cares Act airline bailout will expire.

As travelers have failed to return to the skies in numbers sufficient to keep the airline afloat in its current state, and Congress has failed to produce a bailout bill that would support the travel industry beyond September, companies in the industry are being forced to slash costs dramatically, a move that includes vast payroll reductions.

“As you all know, the Payroll Support Program of the CARES Act protected our team against involuntary separations through Sept. 30,” said American’s CEO, Doug Parker, in a memorandum to employees on Tuesday. “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,” Parker said. “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.”

(Photo: Accura Media Group)

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