American Airlines May Lay Off Enough People to Fill a Small City
American Airlines Group Inc. (NASDAQ: AAL) may lay off enough people to fill a small city. The figure, as many as 25,000, could be that high after the October 1 date, when a government rule says carriers can downsize. That is about the same number of people who live in Winter Park, Florida.
American is not the only carrier that has let people go and will cut more in the future. The carrier hoped a decline in the number of COVID-19 cases would allow it to put passengers in the air again. However, the spread of the disease has grown, and it likely will grow faster. American may not be able to fly anywhere near last year’s customer count. Unfortunately, the figure could drop back toward zero. The virus affects American’s ability to fly both domestically and overseas.
One tactic some airlines have used to help partially fill seats is to keep the center seat in a three-seat row empty. This gives a small measure of social distance, but it barely matches government suggestions. The protection of masks only works if people wear them. Regardless of carrier rules, some people ignore them. Senator Ted Cruz was seen maskless on a recent American Airlines flight. Perhaps he believed he had the right because he is a U.S. senator. Who else can fly without a mask if they wish to? A member of the House of Representatives, a mayor, a governor or another high-level official?
American’s reaction to the Cruz incident was muted, even though members of the senator’s staff say he was drinking coffee. “As we do in all instances like these, we reviewed the details of the matter, and while our policy does not apply while eating or drinking, we have reached out to Sen. Cruz to affirm the importance of this policy as part of our commitment to protecting the health and safety of the traveling public,” Based on a photo, Cruz appears to be outside the rules the airline has set.
American may be among the carriers for which government financial support my not be enough. Airlines have not stated exactly what they will do if their balance sheets run out of cash. Bankruptcies have been part of the industry for decades. American rejected Chapter 11 as a possibility. That was in the middle of May, though, before the new, savage spread of COVID-19 that started a month ago.
American has been one of the great U.S. airlines for decades. Laying off 25,000 people, about the population of a small U.S. city, is a sign that it faces a set of unprecedented challenges.