25,000 Employees Could Be Furloughed, States American Airlines

American Airlines plane on the runway

According to the WashingtonPost – “American Airlines announced Wednesday, after providing billions in federal funding, it is giving reminders to 25,000 workers that they will be furloughed on Oct. 1.”

The news seems to be the second from this month ‘s largest U.S. carrier and this is yet another example of the impact the novel coronavirus has brought on the aviation industry. United Airlines told about 36,000 of its workers last week that they’d be furloughed, on October. A lot of carriers will probably take similar action very soon.

“We dislike taking this step because we recognize the impact on our hard-working team leaders,” Doug Parker, airline executive chairman, and American politician Robert Isom wrote in the letter to the workers.

The sum of American employees experiencing cuts represents around 30 percent of the carrier’s U.S.-based workforce.

Parker and Isom stated in their message that they had assumed the government-backed compensation agreement negotiated in March would enable them to avoid furloughs “because we figured the demand for air travel would be slowly recovering by Oct. 1 as the impact of COVID-19 subsided.

Unfortunately, that wasn’t the case.’

The $2 trillion coronavirus rehabilitation initiative identified as the Cares Act offered more than $50 billion in loans and grants for the airlines to hold front-line workers on the jobs. As a prerequisite of taking $25 billion in grant funds as part of the Payroll assistance system, airlines needed to promise to hold staff on the job until Sept. 30. The pandemic has halted thousands of flights and has costed companies trillions in sales.

Executives have noticed that revenue from June was 80 percent lower than revenues from June of the previous year. Yet, with the rising amount of illnesses in California, Texas, Florida, and other states contributing to additional regulations, demand for air travel is again diminishing.

In its June prediction, the air transport association (IATA) predicted that by 2020 airlines across the world will lose $84.3 billion. Revenue is expected to fall by fifty percent, from $838 billion in the year in 2019 to $419 b.

Underneath the Retraining Notification and Employee Adjustment Act, most companies with 100 or more employees are obliged to give major cuts or factory suspensions after 60 days of notice.

Although American delivers 25,000 notices, it works at slowly reducing the amount of employees it will have to furlough by encouraging many to take an early retirement, unpaid holidays, or time-out schemes. United officials have confirmed they are also trying to raise the amount of employees who they would let go of. However, they agree it would be a challenging job.

“We realize that American would be smaller and therefore all facets of our airline need to be sized right to conform to this new fact” the document said. “Although today is a day that neither of us had planned to see, we have developed fresh, supportive programs to help mitigate as many frontline budget cuts as possible.”