In a letter to employees Wednesday, American Airlines said it will begin the process of furloughing 19,000 employees as the Payroll Support Program expired Sept. 30.
[Ads /]
American CEO Doug Parker said he spoke personally with Treasury Secretary Steve Mnuchin, who told him a bipartisan COVID-19 relief package that would extend the PSP is possible within the coming days. Parker added that if Washington comes up with a deal with $25 billion for airlines "over the next few days," the company will reverse 19,000 furloughs set to begin Thursday and recall the workers.
"Please keep contacting your elected officials about the importance of reaching an agreement," Parker wrote.
United Airlines also said it will involuntarily furlough more than 13,000 employees beginning Thursday.
The carrier previously notified 36,000 employees they faced potential job cuts, but was able to reduce that number to 16,000 through various voluntary buyout and early retirement programs. The carrier said since then, it was able to further reduce the total number of furloughs by working with union partners, introducing new voluntary options and proposing creative solutions that would save jobs.
"I'm aching for my airline, I'm aching for all the airlines, I'm aching for all the employees and all of us who love to travel," said retired flight attendant Karen Harper, who worked for United for 32 years. She's been through a few rounds of furloughs herself, but nothing like this.
"In the early 70's, we were flying great big planes with five passengers on it. So the economic ups and downs over the years has been dramatic, and then of course after 9/11, you walk into an airport and they were empty," she said.
Prior to the COVID-19 pandemic, United had just under 100,000 employees.
The moves by two of the nation's four biggest airlines represent the first - and likely the largest part - of involuntary job cuts across the industry in coming days.
Airline employees and executives made 11th-hour appeals this week to Congress and the Trump administration to avert the now expired furloughs.
The passenger airlines and their labor unions are lobbying for taxpayer money to pay workers for six more months, through next March. Their request is tied up in stalled negotiations over a larger pandemic relief measure.
[Ads /]
Industry officials acknowledged that prospects were bleak for action before Thursday's deadline. They said, however, they were cheered that the House this week included airline payroll help in a $2.2 trillion relief plan that moved closer to Republicans' preference for a lower price tag.
"It provides a glimmer of hope that something will get done," said Nicholas Calio, president of the trade group Airlines for America.
Mnuchin said Wednesday night that the administration wants to help hotels, airlines and schools. He said he was talking with House Speaker Nancy Pelosi but hinted that the White House doesn't want to go above about $1.5 trillion - $700 million below the House Democrats' figure.
"I don't think we're going to make significant progress" until Thursday, he said on Fox Business.
Calio foreshadowed the comments of American and United by suggesting that Thursday might not be a hard deadline - airlines could undo some furloughs if a deal between the White House and congressional Democrats appeared imminent.
"Ideally, if it's going to go beyond Thursday they will be close to a deal and say, 'Hang on for a couple days,' and we can wait," he said. "Beyond that, the notices have gone and furloughs will go into effect."
Sara Nelson, president of the Association of Flight Attendants, said she still expects action by Congress because majorities in the House and Senate have signaled support for more airline relief. She said a bailout that keeps airline workers employed would be cheaper for the government than putting them on the unemployment line during a pandemic.
"These are people who are not going to be able to pay their rent, they are not going to be able to take care of themselves," Nelson said on CNBC.
[Ads /]
Beyond American and United, smaller airlines have sent layoff warnings to several thousand employees. Delta and Southwest, which entered the pandemic in stronger financial shape than American and United, have shed thousands of jobs through voluntary departures but don't plan to lay off workers immediately.
Airlines have persuaded tens of thousands of employees to take early retirement or severance deals. But even after those offers, the airlines have more pilots, flight attendants, mechanics and other workers than they need.
Critics say airlines shouldn't get special treatment, and that subsidizing their workforces will only delay the companies' need to adjust to the downturn in travel - which even airline trade groups think will last three or four years.
"The airlines are always the first ones begging for support. They get bailed out over and over again," Veronique de Rugy, a research fellow at George Mason University and columnist for a libertarian magazine, said in a recent interview. "Airlines have a history of not preparing properly for the next emergency because they know they are going to be bailed out."
Some also believe airlines should be using private loans to keep employees. But some passengers agreed it's a tough situation across the board.
"This year is not good for anybody, so everybody's going through it right now," said Gabriella Soto, who also lost her job during the pandemic.
In March, Congress approved $25 billion mostly in grants to cover passenger airline payrolls through September and up to another $25 billion in loans that the airlines could use for other purposes. Late Tuesday, the Treasury Department said it completed loans to seven major airlines: American, United, Alaska, JetBlue, Frontier, Hawaiian and SkyWest.
American now expects to borrow $5.5 billion from the Treasury, and United can get $5.17 billion. Airlines have also borrowed billions from private lenders. They could use that money to keep employees - as critics like de Rugy suggest they should - but they are trying to cut spending in case ticket revenue remains severely depressed for a long time.
U.S. air travel remains down nearly 70% from a year ago. Signs of a modest recovery faded this summer when COVID-19 cases spiked in many states. Traditionally lucrative business and international travel are even weaker than domestic leisure flying.
WLS-TV, KABC-TV, ABC News and The Associated Press contributed to this report.