Airlines near 50,000 job cuts as American, United feel squeeze

U.S. airlines are preparing to lay off tens of thousands of workers starting Thursday unless they get additional federal aid, sparking a plea from Treasury Secretary Steven Mnuchin to hold off on the cuts amid signs of progress in talks with Congress.

American Airlines Group Inc. has warned that furloughs of 19,000 employees will start when existing U.S. payroll support runs out at the end of the day Wednesday. United Airlines Holdings Inc. said earlier this week that it was planning 12,000 job cuts, and smaller carriers are set to make additional reductions.

The layoffs would cap job losses that already total 150,000 at the nation’s four largest carriers based on employees who have left voluntarily or taken temporary leave. Mnuchin ruled out the likelihood of a stand-alone bill providing only airline aid, but said he’s hopeful that an “understanding” on an overall stimulus bill could be reached by Thursday.

“That doesn’t mean, obviously, that there wouldn’t be a lot more work to do,” Mnuchin said at a CNBC virtual event. “But I am hopeful we can come to an understanding and if we do, that hopefully the airlines will postpone their actions.”

Congressional Democrats have proposed a $2.2 trillion package that includes more support for the nations’ carriers, which are reeling from an unprecedented collapse in air travel because of the coronavirus pandemic. House Democratic Caucus Chairman Hakeem Jeffries said that Mnuchin’s comment “brings us much closer to an agreement than we have ever been.”

A Standard & Poor’s index of major U.S. carriers climbed 1.5% at 12:20 p.m. in New York, led by American and United. The stock gauge lost almost half its value this year through Tuesday, while the S&P 500 Index advanced 3.2%.

With the pandemic gutting demand for flights, carriers have cut executive pay, pared schedules and grounded planes as domestic demand languishes at about 30% of year-ago levels. International travel remains well below that.

Mnuchin said he would brief airline bosses later Wednesday on his most recent discussions with House Speaker Nancy Pelosi. As many as 50,000 jobs are at stake, White House Chief of Staff Mark Meadows said earlier this month.

American Airlines Chief Executive Officer Doug Parker said he was encouraged by the progress of negotiations and would be open to delaying furloughs—but only if a political deal is on the verge of getting done.

“Certainly if there’s a clear and concrete path that says ‘We’re not done yet, but will be soon,’ of course,” Parker said in an interview with CNN. “If it’s a situation where ‘We need much more time to work and it’s unclear whether we can get something done or not,’ that’s going to be much harder.”

Delta Air Lines Inc. will avoid most layoffs until at least next summer after 17,000 workers left voluntarily and 40,000 took unpaid leaves. It remains in talks with its pilots union about ways to reduce or eliminate about 2,000 furloughs.

Southwest Airlines Co. also has said it won’t lay off workers through the end of 2020 after 28% of its workforce agreed to leave permanently or temporarily. But CEO Gary Kelly emphasized the importance of the government’s Payroll Support Program in his weekly message to employees on Sept. 28.

“Just can’t overstate the PSP’s importance to our industry,” Kelly said.