American Airlines plans to cut 30% of it's management and administrative staff due to the impact on the business from the coronavirus pandemic, reports CNBC.
The 30% cut is a reduction of roughly 5,000 jobs, sources say.
Here's what we know so far from CNBC:
- Buyouts were offered to these employees
- According to a company memo CNBC reviewed, voluntary leave and buyouts for frontline staff, for example flight attendants, are planned to be offered next month
- Travel demand is down more than 80% from a year ago
- Airline is expected to "shrink" due to the pandemic's effect on travel demand
- Management and support staff have until June 10 to apply for buyout
- American Airlines is offering management and support staff a third of their pay through the end of 2020, with five years of travel privileges
- If an employee is laid off after Oct. 1, they will not receive a severance
- Management and administrative staff must take take half of their vacation by Sept. 30, no vacation will be rolled over into 2021.
We have already taken steps to prepare for this new reality, with nearly 39,000 team members electing to take a voluntary leave or early retirement. Fleet retirement accelerations are underway, and we will fly roughly 100 fewer aircraft next summer — mostly widebodies — than we had originally planned. Additionally, running a smaller airline means we will need a management and support staff team that is roughly 30% leaner.
After the early buyout volunteers, the "involuntary separations" will be announced in July, according to the American Airlines memo. However, team members will stay on payroll through Sept. 30, 2020 and are to receive full pay and benefits through the CARES Act Payroll Support Program expiration. Although these team members will recieve no severance, they will receive a year of travel and 18 months of COBRA health coverage.
In difficult times it is even more important that we stay true to our purpose of caring for people on life’s journey, even when that journey is a very difficult one. There is no doubt this is going to be a painful time for all, especially for our departing colleagues, who have given American Airlines their all and are leaving through no fault of their own. They deserve our respect and gratitude. Most of all, they are owed our renewed commitment and our collective effort to return American to profitability and growth as quickly as possible.
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