American Airlines to apply for up to $12B in govt aid: Internal Memo

In a memo to executives, American Airlines Holdings Inc stated, it aims to apply for up to $12 billion in government aid, and ensure no involuntary layoffs or pay cuts occur in the next six months.

Under a stimulus package, American Airlines is eligible for around $6 billion in payroll grants and a further $6 billion in loans.

Between the government funds and its own cash position, American will be able to fly “through even the worst of potential future scenarios,” said Doug Parker, the airline’s CEO along with the company’s president Robert Isom in the memo.

The memo also mentions that American plans to improve the terms of voluntary unpaid leave and early retirement options for flight attendants and other employees.

In 2019, American had 133,700 full-time employees, 85% of whom were represented by unions. Wages and benefits are its largest operating expense, and represent 34% of its total revenue expenditure.

With airlines slashing their flying schedules as the coronavirus has crushed air travel demand, their need for pilots, flight attendants, mechanics and gate agents has fallen.

Under the terms of the payroll grants, airlines cannot lay off any employees before September 30.

“We certainly hope and expect that by that time, the virus will be contained, Americans will be flying again and we will be back to flying a full schedule,” said American’s executives.

Categories: Creativity, Economy & Finance, Entrepreneurship, HR & Organization, Regulations & Legal, Strategy, Sustainability

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