American and Delta prepare for potentially massive layoffs
Plummeting demand for travel has forced two major US carriers — Delta Air Lines and American Airlines — to gut their workforces through voluntary exit programs and layoffs.
In a letter addressed to employees, American said Wednesday that it needs to eliminate about 30% of its management and support staff because of its transition into a smaller airline. In addition to the staffing cuts, the Dallas-based company said involuntary separation decisions will be communicated in July, and those staff members will be on payroll until September 30.
“A more efficient leadership team begins at the top, and we are restructuring all levels around key future leaders and functions, beginning with our officer team,” the letter said. “We will announce a reorganized officer team soon, and those leaders will be restructuring at the next levels shortly thereafter.”
Delta announced a similar initiative Thursday, telling employees in a memo obtained by CNN that a “smaller Delta, unfortunately, means fewer people will be required.” The airline has drastically cut its schedule in the spring, but is restoring some routes in June. Still, its second-quarter schedule is 85% smaller than the same period last year.
The company is offering employees two voluntary exit programs, including a retirement package for employees who have worked at Delta for more than 25 years. It’s also offering another buyout that covers most of its 90,000-strong employees.
Neither airline can enact the planned layoffs until October, once the limitation on the federal bailout lifts. Several US airlines accepted government money in April, including Delta, American, Southwest and United totaling roughly $50 billion.
United warned in April that it was also planning to cut its employee count this fall after saying that travel demand is “near zero.” It warned some of its staff that the airline will sharply reduce hours and staffing in the months to come.
In a memo that went out to about 11,500 workers, Kate Gebo, United’s head of human resources, said the company’s management and administrative team could be reduced by 30% in October after funding from the US government’s CARES Act runs out.
United disclosed earlier this month that 20,000 employees, more than 20% of its staff, have taken voluntary leave. They also announced it would be offering buyouts and early retirement packages to employees.
But United Airlines’ new CEO last week said he hopes to avoid staff cuts, despite the need to significantly reduce labor costs in the face of sharply lower demand for air travel.