DALLAS _ American Airlines plans to cut its management and support staff by 30% by Sept. 30 and will start laying off workers if it doesn't get enough volunteers for buyouts.
Fort Worth-based American announced the plans to workers Wednesday night, saying the company will need fewer aircraft next summer, run fewer routes and overall is preparing to run a smaller airline.
"Fleet retirement accelerations are underway, and we will fly roughly 100 fewer aircraft next summer _ mostly widebodies _ than we had originally planned," Elise Eberwein, American Airlines executive vice president of people and global engagement, said in a letter to employees. "Additionally, running a smaller airline means we will need a management and support staff team that is roughly 30% leaner."
Those targeted include employees in administration, marketing, planning, finance and other functions. The announcement only applies to those at American Airlines and not its regional carriers.
The cuts could hit hard at American Airlines' headquarters in Fort Worth near DFW International Airport, where there are about 12,000 employees in a new $350 million headquarters building constructed to accommodate a growing workforce.
But the COVID-19 pandemic has taken momentum away from any growth in the airline industry and instead has leaders looking at how they can cut costs as fast as possible in efforts to preserve their companies. American is burning through about $70 million a day as the number of passengers has dropped by more than 90% since mid-March.
American has already posted its voluntary buyout package and if it doesn't get enough volunteers, the company will start communicating "involuntary separation" in July and employees will remain on the payroll through Sept. 30.
American and other airlines have agreed not to furlough or lay off workers through the end of September in exchange for billions in government loans and grants. American received more than $10 billion in grants and loans and is requesting another $4.75 billion from the Treasury Department. The company is also banned from share buybacks, dividends, executive pay raises and from cutting routes for a period of time in exchange for the government financial assistance.
But American executives said as recently as Wednesday that it needs to "right-size" the airline and CEO Doug Parker said earlier this month that American will "go into the fall with more team members than we have work for."
Parker also said Wednesday that the company is not considering bankruptcy and that is has made it a goal to get through the crisis without furloughs.
Management and support staff is one of the few workforces the company can cut without going through unions.
There are nearly 17,000 workers in the management and support staff group and the company is "restructuring all levels around key future leaders and functions, beginning with our officer team," the letter said.
An announcement regarding a "reorganized management team" will come soon, the company said.
American is also cutting merit bonuses for management and support staff and requiring all those employees to take half of their yearly vacation time by Sept. 30. American doesn't plan to pay severance to workers who will be laid off, but they will get flight privileges for a year.
