American, United Start Cutting over 30,000 Jobs
(CNN) Time has run out for 32,000 airline employees at American and United. American Airlines (AAL) CEO Doug Parker said late Wednesday that the airline has no choice but to cut 19,000 jobs after attempts to get more federal money failed. United Airlines (UAL) CEO Scott Kirby said the decision to cut 13,000 jobs marked "a very sad day for all of us here at United."
Earlier in the day, Parker told CNN he still hoped that the job cuts might be avoided if the airline saw signs that Congress and Treasury Secretary Steven Mnuchin would be able to reach a deal. They were considering a multi-trillion dollar stimulus package that would include $25 billion in help for the nation's airlines. But sources told CNN that an agreement needs more time to win the support it needs to pass.
"Unfortunately, there is no guarantee that any of these efforts will come to fruition," Parker wrote in a memo to staff.
Both Parker and Kirby suggested they could reverse course and quickly recall employees if a deal is reached in the coming days, though.
"We implore our elected leaders to reach a compromise, get a deal done now, and save jobs," Kirby wrote in his memo to employees.
The Covid-19 pandemic has caused air traffic to plunge, which has devastated the airline industry. American lost $5 billion in the first half of this year, while United lost $3.3 billion. Every other airline in the industry has also lost money. The losses are projected to continue into 2021 if not beyond.
Lawmakers agreed to give airlines $25 billion in direct grants earlier this year as long as they agreed to no involuntary job cuts through the end of September.
But the probation on involuntary job cuts expires Thursday. And while seven airlines — including American and United — are prepared to accept another round of loans that was also approved earlier this year, that aid does not include a prohibition on cutting jobs.
Even with the prohibition on job cuts, airlines were already taking measures to trim costs. They offered voluntary buyout and early retirement packages that prompted nearly 50,000 employees to leave the industry.
In addition to the job losses at American and United, some 17,000 other employees throughout the US airline industry have been notified their jobs are also at risk.