Airlines Plan Layoffs of 35,000 or More Oct. 1

Airlines Plan Layoffs of 35,000 or More Oct. 1

The global coronavirus pandemic has crushed airlines throughout the world, with travel restrictions and lockdowns causing empty flights, leading to what is expected to be more than 35,000 layoffs in the industry for the year’s final quarter, starting Oct. 1.

Amid stalled coronavirus stimulus talks in Congress, struggling airline companies are going to be forced to cut their workforce to match the limited worldwide travel due to the pandemic.

“So there’s going to be smaller airlines, but we’re going to recover,” Association of Flight Attendants President Sara Nelson to Yahoo Finance.

U.S. airline unions expressed hope Thursday that Congress could strike a deal in the coming days that would provide $25 billion to prevent tens of thousands of furloughs Oct. 1 after the U.S. Treasury Secretary Steven Mnuchin said he could not act unilaterally to save airline jobs.

A new Democratic-proposed House bill is expected to provide $2.4 trillion in coronavirus relief that would include funds for airlines and restaurants, a congressional aide said, down from $3.4 trillion approved in May. That figure is still far above the $300 billion Senate Republicans backed earlier this month.

“Because it is a hard deadline of Oct. 1, and oftentimes Washington or any negotiations need a hard deadline,” according to Association of Flight Attendants President Sara Nelson to Yahoo Finance.

“And we’re really much more over 100,000 people who are going to be living without a paycheck,” she added. “We’ve done some things to try to keep some benefits in place but this is unraveling.”

Among the previously feared layoffs are, per the report:

  • United Airlines potentially slashing half of its staff, which would be 36,000 employees, Inc. reported.
  • American Airlines has already accepted 23,500 of 140,000 employees taking buyouts, early retirements, or extended furloughs, but it still has expected to have to trim 40,000 jobs from that 140K, including 19,000 through furloughs and layoffs Oct. 1, AP reported in August.
  • At Delta Air Lines about 40,000 have taken leaves of absence of various lengths. Delta had 90,000 employees before the pandemic, but with buyouts and retirements has reduced that number to 75,000.
  • Southwest says it can avoid further layoffs through the end of the year, but with the expectation of more cuts in 2021.

American Airlines Group Inc. closed a $5.48 billion loan Friday with the U.S. Treasury, increasing its pool of cash to help fund operations until travel demand begins to return.

The credit facility, backed by American’s loyalty program, increased from an original $4.75 billion target after companies such as Delta Air Lines Inc. and Southwest Airlines Co. opted out of the funds and the remaining money was reallocated. American said it could receive as much as $2 billion more when the funds are adjusted a second time, according to a regulatory filing Friday.

While the White House has repeatedly said it would seek executive action to help airlines if Congress failed to pass a deal, Secretary Mnuchin told Congress on Thursday he cannot tap unused coronavirus lending authority to provide cash grants to airlines.

“Is there anything that you have under existing authorities, either the CARES act authorities, or prior law, that could help the airlines avoid these coming layoffs?” Sen. Tom Cotton, R-Ark., asked Mnuchin.

“Unfortunately there is not,” Mnuchin said. He added the funding from Congress approved in March “literally saved the entire industry.”

Many congressional aides and some airlines are pessimistic about the prospects of a new bailout.

“We are seeing that this is moving us to a full relief bill,” Nelson said over Facebook Live.

An initial $25 billion in payroll assistance under the CARES Act approved in March required no layoffs by airlines through Sept. 30, but with industry continuing to struggle, airlines are pleading with Congress for more money.

Information from Reuters and The Associated Press was used in this report.

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