On July 2, American Airlines told employees the company is overstaffed by 20,000 employees with a lighter fall flight schedule due to the COVID-19 pandemic.
Like its competitors, the Fort Worth-based carrier is suggesting employees take buyouts or early retirement as a way to reduce its staffing levels before having to resort to more involuntary measures to reduce the size of its workforce like layoffs.
At the end of 2019, American had approximately 134,000 employees.
However, since the airline industry accepted $25 million in government loans earlier this year, carriers cannot lay off staff or reduce their pay until September 30. American expects its loan to be finalized in the third quarter of 2020.
Since the start of the pandemic, American, like every other domestic carrier, has strengthened its liquidity and reduced costs as demand remains starkly lower than it was in 2019, even for the peak summer travel season.
In April, American was using $100 million cash per day. The company reduced that daily burn to $35 million in June.
Besides effectively reducing expenses, American has also seen its revenue grow from $11 million in April, when the demand crisis was at its worst, to $358 million in May and over $1 billion in June according to company executives.
On July 1, American announced it was adjusting its long-haul international schedule for winter 2020, including eliminating 19 routes, extending into summer 2021, when international flights are projected to decrease by 25 percent.
Other cost containment measures American has announced includes reducing cabin crew staffing levels for its wide-body aircraft for international and transcontinental flights, potentially reducing the size of its flight attendant bases and eliminating bases in Raleigh and St. Louis.
Chicago-based United Air Lines has also encouraged employees to accept buyouts, informing staff the company will accept applications through July 15. For employees whose applications are accepted, their final day with the company would be July 29.
It’s a similar story with Atlanta-based Delta Air Lines, who sent Worker Adjustment and Retraining Notification (WARN) Act notices of potential furloughs to 2,500 pilots the final week of June.