American to furlough 19,000 as clock runs out on airlines

American Airlines will begin furloughing 19,000 employees on Thursday after lawmakers and the White House failed to agree on a broad pandemic-relief package that includes more federal aid for airlines.

CEO Doug Parker said Wednesday night that if Washington comes up with a deal for $25 billion in airline aid “over the next few days,” American will reverse the furloughs and recall the employees.

The move by American represents the first — and likely the largest — involuntary jobs cut across the industry in coming days. United Airlines has indicated it could furlough nearly 12,000 workers.

Airline employees and executives made 11th-hour appeals this week to Congress and the Trump administration to avert furloughs when a federal prohibition on layoffs — a condition of an earlier round of federal aid — expires Thursday.

The passenger airlines and their labour unions are lobbying for taxpayer money to pay workers for six more months, through next March. Their request is tied up in stalled negotiations over a larger pandemic-relief measure.

Industry officials acknowledged that prospects were bleak for action before Thursday’s deadline. They said, however, they were cheered that the House this week included airline payroll help in a $2.2 trillion relief plan that moved closer to Republicans’ preference for a lower price tag.

In March, Congress approved $25 billion mostly in grants to cover passenger airline payrolls through September and up to another $25 billion in loans that the airlines could use for other purposes. Late Tuesday, the Treasury Department said it completed loans to seven major airlines: American, United, Alaska, JetBlue, Frontier, Hawaiian and SkyWest.

American now expects to borrow $5.5 billion from the Treasury, and United can get $5.17 billion. Airlines have also borrowed billions from private lenders. They could use that money to keep employees — as critics like de Rugy suggest they should — but they are trying to cut spending in case ticket revenue remains severely depressed for a long time.

U.S. air travel remains down nearly 70% from a year ago. Signs of a modest recovery faded this summer when COVID-19 cases spiked in many states. Traditionally lucrative business and international travel are even weaker than domestic leisure flying.

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