American Airlines Says It Must 'Right-Size' During COVID-19 Pandemic
FORT WORTH (CBSDFW.COM) - American Airlines CEO Doug Parker says the airline has been burning through about $70 million a day and so it has to cut expenses.
During a webinar Wednesday, he said, "We're looking to reduce costs and right-size the airline for the current environment."
Parker said, while some customers have returned, business is still down. "When we're flying 20% of our schedule, even at 50% load factors, we're down 90% of our revenues still."
On Wednesday evening, the airline sent a letter to its 17,000 employees in management and support staff that it needs to reduce that part of the airline by 30%.
The letter said, "We need to reduce our cost structure, including our most significant expense — the cost of compensation and benefits..."
The airline says it's giving these employees a chance to voluntarily retire, and that if there aren't enough volunteers, there will have to be layoffs.
Executives say the cuts would be made in July, but staff would remain on the job through Sept. 30.
That's because the airline has received $10 billion dollars as part of a relief package approved by Congress, and part of the agreement is they can't layoff or furlough employees until Oct. 1.
The letter to employees said after finalizing the size of the management and support staff, it will focus on its frontline team and open a new voluntary leave and early out program for them in June.
The airline says nearly 39,000 employees have already taken voluntary leave or early retirement.
They include 11,000 of the airline's 28,000 flight attendants.
Paul Hartshorn, Jr., the National Communications Chair of the Association of Professional Flight Attendants said, "I think there are some flight attendants who will be interested in voluntary leaves in addition to the ones who've already taken a leave of some sort. We would hope we would be able to see extensions for those on leave now who would like to stay out just a little bit longer."
Captain Dennis Tager, spokesman for the Allied Pilots Association which represents American's pilots, said for the month of June, 34% of the airline's pilots took either voluntary leave or retired early.
He praised the airline's effort to work with employee groups.
CBS 11 News called the union representing the airline's mechanics but didn't hear back.
American Airlines executives say they hope demand for air travel will increase by next summer but in the meantime, the airline has accelerated the retirements 100 jets, mostly wide-bodies.