Furloughs Expected as American Airlines Reports Financial Losses

Staff Report | DFW Newsflash | August 2020

American Airlines recently reported $2.1 billion in losses. These developments came just after American Airlines announced a likely furlough of employees across the country.

The airline notified states of operation of the possible furlough on July 22 as required under the U.S. Department of Labor’s Worker Adjustment and Retraining Notification (WARN) Act. American Airlines signed a letter stating it could potentially furlough 25,000 employees across the United States due to lower revenues reflected in the month of June. Data shows that the company’s revenue has dropped 80 percent as a result of COVID-19. Furloughs are expected to be scheduled and enacted in early October.

Some furloughs are expected to be temporary due to bumping rights held by employees as explained in a letter to city, county and state officials from Patrick O’Keeffe, senior vice president for American Airlines.

Bumping rights provide for an employee to displace another employee because of a layoff or other employment action as defined in a collective bargaining agreement, employer policy or other binding agreement.

Voluntary programs provided to workers include extended leaves of 15, 18 or 24 months that also provide continued medical coverage at active rates, continued non-revenue travel privileges and partial pay for certain eligible team members, according to a memo AA released. An early-out program for workers with at least 10 years of occupational seniority is also being provided as an option. This program also includes up to $150,000 in the form of a retiree health reimbursement arrangement for 65-point plan retirement-eligible team members.

The early-out program is not limited entirely to those who have been employed longer, as benefits are available for team members who have fewer than 10 years of occupational seniority. This ensures continuation of active medical coverage and non-revenue travel privileges.

American Airlines announced a partnership with JetBlue Airways Corporation on July 23. This will provide better options to travelers from the Northeast US in both their domestic and international networks. The partnership has also been made to maintain financial stability for each company during the pandemic.

Other benefits of the partnership include added travel benefits and incentives for passengers.

Under certain criteria, the WARN Act requires employers to give their workers 60 days notice before a plant closing or mass layoff. This could be required in cases concerning layoffs of 50 workers in the event they comprise at least one-third of the total workforce, or in layoffs of 500 workers or more at a single site.