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American Plans to Shrink Management Staff by 30%
Amidst COVID-19 and its effects on many industries in the economy during this time period, around the world, the aviation industry has been one of the top sectors that are deeply affected by the global pandemic. Many major U.S. airlines are attempting to rebound, through modified cleaning procedures, more flexible fare policies and seat distancing for passengers. However, these may not be enough to maintain the magnitude and size of the airline that it was prior, which is the current case at American Airlines with downsizing to restructure the company.
American is actively taking steps to effectively prepare for the new reality that could come as a result of COVID-19. For example, the Fort Worth, Texas-based airline is planning on cutting its management and support staff by 30 percent or around 5,000 jobs, in order to manage a smaller airline for the future. Elise Eberwein, American’s executive vice president of people and global engagement, discusses the cost cuts that must be reduced, in order to successfully restructure the airline.
“Although our pre-pandemic liquidity, the significant financial assistance provided by the government, and the cash we’ve raised in the capital markets provide a foundation for stability, we need to reduce our cost structure, including our most significant expense — the cost of compensation and benefits,” Eberwein said in an internal letter.
During this time period, American and many other airlines are scrambling to cut costs while attempting to operate some flights and keep some of the schedules, despite an enormous drop in travel demand. Consequently, American expects to shrink due to weak demand, which has led to parking airliners, slashing routes, and urging employees to take unpaid leave or retire early.
“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,” she added.
American will first start shrinking the airline with the Management and Support Staff (MSS) and has instructed MSS team members that they have until June 10 to apply for the Voluntary Early Out program. Thus, those who volunteer and are laid-off will stay on the payroll, receiving pay through Sept. 30, to comply with a no-furloughs provision attached to $5.8 billion in government aid that American is getting to help cover payroll costs. Affected employees will be notified of the transformation details through July.
Meanwhile, those still left will need to complete half of their vacation by Sept. 30, and the airline will not rollover unused vacation days into 2021. As the future of the airline industry is uncertain, American is trying to adapt to the new environment that has come out of the pandemic.
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