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Jul 2, 2020

American Airlines says it will have 20,000 more employees than needed

An American Airlines employee wears a protective mask and stands behind a protective barrier while checking in a traveler. Photographer: Andrew Harrer/Bloomberg

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American Airlines Group Inc. will have over 20,000 more employees than it needs to operate a deeply reduced flying schedule as travel demand slowly rebuilds amid the coronavirus pandemic.

The estimate represents about 20 per cent to 30 per cent of American’s expected workforce later this year. Not all would necessarily be furloughed after Sept. 30, however, because the carrier is continuing efforts to trim jobs through leave, early retirement and voluntary separation programs, the airline’s top executives said.

“We still have work to do to right-size our team for the airline we will operate,” Chief Executive Officer Doug Parker and President Robert Isom said in a memo to employees Thursday. “We are committed to resetting the airline using a different playbook than the one of past crises where last-in, first-out furloughs were the expected result.”

American’s sobering outlook illustrates the depth of the airline industry’s challenge to recover from the worst-ever collapse in travel demand. Carriers worldwide have parked jets, slashed flying, boosted borrowing, trimmed workforces and in many cases received billions of dollars in government aid. While leisure travel is slowly returning, passenger numbers are only about a quarter of last year’s levels. A full rebound isn’t expected until at least 2023.

Flight Attendants

American has reduced its summer 2021 international schedule by 25 per cent from pre-pandemic levels, signaling a limited recovery. The company has also notified flight attendants that it has as many as 8,000 more of them than it needs. American said it would cut staffing on some flights, close two bases for flight attendants and reduce the size of others.

In addition, American last month said its officer ranks would shrink by 30 per cent. It was the first phase of changes under which almost a third of management and support staff will be cut.

U.S. carriers are prohibited from implementing mass involuntary layoffs through September under the terms of the government’s aid for payrolls, airlines’ largest expense.

American said Thursday it signed a term sheet with the U.S. Treasury for an additional US$4.75 billion loan, and expects to finalize the deal this quarter. The financing, in addition to the US$5.8 billion in payroll support received earlier, brings liquidity to US$15 billion, the Fort Worth, Texas-based carrier said. American has reduced its daily cash burn to less than US$35 million at the end of June from US$100 million in April.

The airline took in more than US$1 billion in cash receipts in June, up from US$11 million in April but far below the average of US$4.2 billion monthly during the same periods of 2019, Parker and Isom said. American’s average number of filled seats has climbed to 63 per cent last month from 15 per cent in April.

The company flew 4.2 million customers in June, compared with between 17 million and 19 million a year earlier.