(Bloomberg) -- American Airlines Group Inc. will start laying off 19,000 workers on Thursday as originally scheduled, spurning an appeal from U.S. Treasury Secretary Steven Mnuchin as he negotiates with Congress about extending payroll support for U.S. carriers.
The airline will reverse the furloughs if the government agrees to provide additional aid in the next few days, Chief Executive Officer Doug Parker told employees Wednesday. House leaders postponed a vote on a broad economic relief plan, which includes $25 billion in payroll aid for airlines, to give Speaker Nancy Pelosi more time to hammer out a compromise with Mnuchin.
American’s decision to move ahead with job cuts heightens the pressure on Mnuchin and Pelosi as they haggle over the Democrats’ proposed $2.2 trillion stimulus package. With the coronavirus pandemic gutting demand for flights, carriers have already cut executive pay, pared schedules and grounded planes as domestic demand languishes at about 30% of year-ago levels. International travel remains well below that.
“I am extremely sorry we have reached this outcome,” Parker said in a letter to employees. “It is not what you all deserve.”
The Treasury secretary urged airlines earlier Wednesday to consider delaying layoffs that were set to begin when $25 billion in payroll aid for U.S. carriers expires at the end of the day. The House’s new package would provide airlines with another $25 billion for the next six months.
Tens of thousands of jobs are at risk, including about 12,000 at United Airlines Holdings Inc., without new aid for employee costs, which are often the companies’ largest expense. The layoffs would add to job losses that already total 150,000 at the nation’s four largest carriers based on employees who have left voluntarily or taken temporary leave.
Even with pared spending, the industry is losing billions monthly as costs outpace incoming revenue, and carriers have said they will be smaller for several years.
Parker said earlier Wednesday that he was encouraged by the progress of negotiations and would be open to delaying furloughs -- but only if a political deal was on the verge of getting done.
“Certainly if there’s a clear and concrete path that says ‘We’re not done yet, but will be soon,’ of course,” Parker said in an interview with CNN. “If it’s a situation where ‘We need much more time to work and it’s unclear whether we can get something done or not,’ that’s going to be much harder.”
Delta Air Lines Inc. will avoid most layoffs until at least next summer after 17,000 workers left voluntarily and 40,000 took unpaid leaves. It remains in talks with its pilots union about ways to reduce or eliminate about 2,000 furloughs. Southwest Airlines Co. also has said it won’t lay off workers through the end of 2020 after 28% of its workforce agreed to leave permanently or temporarily.
A Standard & Poor’s index of major U.S. carriers has fallen 47% this year, with declines led by United and American. The S&P 500 Index has advanced 4.1%.
©2020 Bloomberg L.P.
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