Airline industry expert predicts future widespread cuts

Business

LOS ANGELES (NewsNation) — A letter went out to tens of thousands of American Airlines employees Tuesday, warning them of involuntary furloughs unless more help comes through from Congress. According to one industry observer, more federal help is unlikely, so painful, widespread cuts are likely.

With air travel down sharply since the pandemic, the industry has stayed afloat with a huge assist from the CARES Act – about $50 billion federal dollars to cover employee salaries and benefits. But the act expires on September 30th.

Tuesday, American Airlines revealed plans to lay off or furlough 19,000 employees on October 1st. Transportation expert Dr. Joe Schwieterman of DePaul University predicts wider cuts.

“It’s really the whole sector. American, Delta, United… all are warning and now American’s announcing that there’s going to be big cuts,” Schwieterman said. “And American’s going to be down 40,000 people since the pandemic started. That’s just a shocking number.”

American plans to fly less than 50% of its routes in the fourth quarter. That’s after announcing just last week that service to fifteen smaller U.S. markets would be suspended. American’s biggest pilots union says any cuts are multiplied more than tenfold since other industries rely on the airlines.

“When you see 20,000 jobs lost at American Airlines, multiply that by 13 and it’s a little bit more. And you’ve got 266,000 jobs,” Allied Pilots Association spokesman Dennis Tajer said. “Bring in United and Delta and whatever other airlines and you’re looking at potential for a million jobs lost because of the airline loss.”

Cuts have already been announced at Delta Airlines, as well. Pilots were informed yesterday that 1,941 of them would be furloughed in October – that includes every pilot hired after July of 2017.

Despite the grim short-term outlook, Schwieterman has some hope for the long-term.

 “There’s a great stock market, low fuel prices, a lot of pent up demand. But all bets are off on if or when we’re going to have a full recovery right now. Business travel is particularly going to lag for quite some time,” Schwieterman said.

The industry and union leaders continue to lobby Congress for an extension of the CARES Act. But there is essentially no movement on any economic aid packages at this time.

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