New York (CNN Business)Time has run out for 19,000 American Airlines (AAL) employees.
CEO Doug Parker said late Wednesday that the airline has no choice but to cut those jobs after attempts to get more federal money failed.
Earlier in the day, Parker was holding out hope 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,” he wrote in a memo to staff.
Parker did not close the door, though, on quickly recalling employees if a deal is reached in the coming days.
“In an effort to encourage cooperation and keep hope alive for our team, I informed the Secretary that if these efforts to extend [federal support for airlines] are successful over the next few days, we will reverse our furlough processes and recall any impacted team members,” he added in the memo.
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. 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 — are prepared to accept another round of loans that was also approved earlier this year, that aid does not including 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 American, United Airlines (UAL) has warned 12,000 employees that they are at risk of job losses. Some 17,000 other employees throughout the US airline industry have been notified their jobs are also at risk.
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