American Airlines sending furlough notices to 25,000 employees

The COVID-19 pandemic has hit American and other major airlines

American Airlines (AAL.O) said on Wednesday it is sending 25,000 notices of potential furloughs to frontline workers and warned that demand for air travel is slowing again as COVID-19 cases increase and states re-establish quarantine restrictions.

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The Worker Adjustment and Retraining Notification Act requires companies to provide 60 days’ notice of potential layoffs or furloughs.

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AALAMERICAN AIRLINES GROUP INC.13.91-0.09-0.62%

In a memo to employees released on Wednesday, American said the notices are tied to the overstaffing it expects in October when U.S. government payroll assistance expires.

American, with more than 130,000 employees in 2019, had already warned that furloughs would be hard to avoid as pandemic-hit revenue remains more sluggish than the airline had hoped.

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Among different work groups, warnings are being sent to 2,500 pilots or about 18% of the total, nearly 10,000 flight attendants or 37% of the total, and 3,200 mechanics or 22% of the total.

Overall, American expects to be overstaffed by about 20,000 in the fall, but hopes to reduce the actual number of furloughs through enhanced leave and early-departure programs it has rolled out alongside unions, Chief Executive Doug Parker and President Robert Isom said in the memo.

Delta Air Lines Inc (DAL.N) said this week it believed it could avoid furloughs in the fall after about 17,000 employees signed up for early-departure deals.

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By encouraging more senior workers to leave, U.S. airlines could trim their labor costs -- their main expense -- during the recovery, giving them more pricing power. Airline union contracts require airlines to furlough junior workers first.

United Airlines (UAL.O) has sent 36,000 furlough notices, representing about 45% of workers, and Southwest Airlines (LUV.N) has also warned that job losses will be hard to avoid.

After boosting summer flying following some signs of pent-up leisure demand in May and June, some airlines are now scaling back their schedules due to a surge in COVID-19 cases across the country.

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The U.S. outbreak has prompted several countries to impose travel restrictions on Americans. The European Union excluded the United States from its “safe” travel list.

Both Canada and Mexico want to extend the ban on non-essential travel at U.S. borders.

Even within the United States, Americans from 22 states are required to self-quarantine for 14 days if they enter New York or New Jersey, two states that have managed to curb infections.