Struggling American Airlines prepares to furlough 19,000 workers
FORT WORTH, Texas - American Airlines is preparing to furlough tens of thousands of workers if Congress does not approve another loan package.
American's executives described on Wednesday how the airline is changing priorities to account for a major loss of business travel.
The airline says it's burning through some $30 million every single day. That's down from last month.
Airlines executives are focused on three areas: building up cash, reducing cost and adjusting the way they operate the airline
During a webcast Wednesday, American Airlines Chief Operating Officer Robert Isom said the company is trying to right-size the Fort Worth-based carrier to match lower demand.
“While we do see gradual bookings and we hope it's sustainable, it's still too soon to tell,” Isom said. “So the key for us is flexibility.”
Robert Isom says business travel is down a staggering 95% from pre-pandemic numbers.
The airline announced plans to involuntarily furlough 19,00 employees at the end of the month when CARES Act money expires.
Meanwhile, American is seeing a slight uptick in leisure travel.
“This is a crisis about demand. There's simply not enough travel to fill up the airplanes,” said American Airlines Chief Revenue Officer Vasu Raja. “So it's causing us to rethink how to approach leisure and business.”
SMU Economist Mike Davis says all of the major airlines are having to make big cuts to their budgets in order to remain viable.
“What we're seeing in the airline industry is what we're seeing across the economy,” he said.
American is hoping business travel will eventually improve.
Davis says it may take some time.
“The business travel thing is quite the wild card,” he said. “There's the question of whether people never realized they never really needed face-to-face meetings before.”
American's fleet is another issue.
The airline has 24 Boeing Max jets grounded by the FAA for safety issues since march of 2019. American has another 18 ready for delivery and hopes to delay an order for 18 more. The hope is demand will take off again sometime soon.
“I think we're all getting a little optimistic about a vaccine, but there's a lot that can go wrong with that,” Davis said.
American Airlines is flying commercial flights for the first time since the 1980s. The airline is anticipating high demand and the need for fast distribution if a vaccine is developed.
American says it will be able to carry vaccine shipments in its refrigerated coolers if and when a treatment is approved.