American Air Warns of 13,000 Layoffs as Summer Outlook Dims

(Bloomberg) -- American Airlines Group Inc. warned 13,000 employees that they could be laid off, many for the second time in six months, saying a much-anticipated summer travel rebound isn't materializing.

The carrier will send out government-required WARN notices Feb. 5, Chief Executive Officer Doug Parker and President Robert Isom told workers in an email Wednesday. The warning came less than a week after United Airlines Holdings Inc. told 14,000 employees that their jobs may again be in danger.

The risk of new layoffs highlights the weak outlook for travel demand amid heavy coronavirus case totals worldwide and tougher government travel restrictions. With vaccination campaigns still in the early stages, domestic airline passengers are at less than 40% of 2019 levels. Foreign travel is at only about 15%, the International Air Transport Association said Wednesday.

At the end of 2020 “we fully believed that we would be looking at a summer schedule where we'd fly all of our airplanes and need the full strength of our team,” Parker and Isom said. “Regrettably, that is no longer the case. The vaccine is not being distributed as quickly as any of us believed, and new restrictions on international travel that require customers to have a negative Covid-19 test have dampened demand.”

Five weeks into the new year, they said, “we unfortunately find ourselves in a situation similar to much of 2020.”

American fell 1.7% to $17.30 after the close of regular trading in New York. The shares have tumbled 35% during the last 12 months, the second-biggest drop in a Standard & Poor's index of nine U.S. airlines.

Job Uncertainty

Furloughs could be avoided should travel unexpectedly rebound strongly or if Congress provides a third round of federal aid by April. Notices will be sent to 4,245 flight attendants, 1,850 pilots, 3,145 fleet service workers and others.

U.S. airlines furloughed workers in October when an initial round of $25 billion in government aid expired. Then they recalled most of the affected employees after Congress passed an extension of payroll support in late December. That second round of funding, for $15 billion, expires March 31. Airlines and labor unions are lobbying for additional federal assistance.

“Issuing these required WARN notices isn't a step we want to take,” the email said. “Tens of thousands of our colleagues have faced extreme uncertainty about their job security over the past 12 months, and that's on top of the emotional stress all of our team has faced during an incredibly difficult year.”

In hopes of reducing the number of job cuts, the Fort Worth, Texas-based airline also is offering a third round of voluntary separations and 12- to 18-month leave options that frontline employees can choose, excluding pilots.

American furloughed 19,000 workers on Oct. 1, on top of 12,500 who had left the company voluntarily and 11,000 who previously took leaves of varying duration. Leaves are partially paid and include some benefits.

Delta Air Lines Inc. has avoided furloughs, relying instead on 18,000 voluntary departures and 50,000 workers taking unpaid leaves of as long as a year. Southwest Airlines Co. also has said it won't lay off any workers at least through 2021.

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