American Airlines is planning to warn staff this week about potential furloughs.
According to a report by CNBC, American Airlines is the latest carrier to prepare employees for job cuts due to the impact of the COVID-19 pandemic on the airline business.
US airlines received $25 billion in federal coronavirus aid as part of the Coronavirus Aid, Relief, and Economic Security Act.
The terms of the airline bailout prohibit carriers from laying off workers or cutting their pay rates until Sept. 30, but weak demand is forcing airlines to ready cut costs, CNBC reported.
CNBC reported that the Worker Adjustment and Retraining Notification Act generally requires employers to notify employees about possible layoffs or furloughs 60 days in advance. It is not guaranteed that staff members who receive these warnings will be laid off.
American, a Fort Worth-based airline, said earlier this month that it is overstaffed by approximately 20,000 people for its reduced fall schedule.
The furlough notices will go out to front-line employees like pilots, flight attendants, mechanics and others, CNBC reported.
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American had more than 133,000 employees at the end of 2019, with approximately 15,000 pilots.
These pilots have already been offered early retirement packages under an agreement with their union, the Allied Pilots Association.
In 2019, labor accounted for more than a third of American Airlines's operating expenses, CNBC reported.
“Our expectation is that WARN notices will be sent next week,” Chip Long, American’s managing director of flight line operations, said in an audio message heard for pilots heard by CNBC on July 10. “Again, our hope is to very soon engage with APA and seriously explore every opportunity to take care of our pilots while taking care of our airline.”
According to CNBC, the Allied Pilots Association wants American to expand early retirement options to more pilots and warned that furloughs could drive up costs because certain pilots will need to be trained on new aircraft.
Furloughs are usually based on seniority, meaning newer pilots are more likely to lose jobs.
The exact numbers of pilots who will receive the notices wasn’t immediately clear, CNBC reported.