American Airlines will further reduce its flight schedules in April and May as it tries to adjust to rapidly deteriorating customer demand from the COVID-19 pandemic.
American will cut domestic flights by 60% to 70% in April compared to original plans and 70% to 80% in May. International flying will be down 80% to 90% in those months as the airline is left operating just a handful of international flights.
Fort Worth-based American is making more flight cuts as Congress gets ready to approve a $2 trillion stimulus that includes more than $50 billion for commercial airlines, including $25 billion in direct grants.
In a video message, CEO Doug Parker said the company could get $12 billion in federal assistance, although he said there are questions about what kind of conditions grants and loans could come with.
Still, it will mean dramatic cuts at the Fort Worth-based airline that has more than 33,000 local employees.
“While the lack of furloughs would keep our full team employed and with full benefits in the crisis, there are going to be fewer hours to work for many of our team members,” Parker said. “Many groups will be at minimum paid hours for the next few months.”
American, Dallas-based Southwest and other airlines are also in the process of signing up workers for voluntary partially paid and unpaid leave for up to a year that could further help lower payroll expenses.
TSA figures show that U.S. airline passengers have dropped by more than 90% compared to last year and crew members for American and Southwest say they are flying planes with fewer than a dozen passengers.
Airlines have been scrambling to cancel planes on a day-to-day basis because there are simply not enough passengers on them to justify flying.
“I can assure you we are losing money on every single flight and big money, said Southwest Airlines CEO Gary Kelly in a video posted to Youtube Thursday night. “And that’s not sustainable.”
Kelly said Congress’ stimulus package gives Southwest flexibility as it tries to avoid furloughing employees.
“It gives us another option,” Kelly said. “We have the opportunity to raise capital in the private markets and now we also have that opportunity with the federal government.”
Airlines are making cuts for April and May because that’s where passengers are dropping the most flights. But they are hopeful that will changes, said Jeff Pelletier, managing director of Dallas-based Airline Data Inc.
“The carriers are being optimistic and that is why a lot of the cancellations don’t go past May right now,” Pelletier said. “There is an overall hope that traffic will begin to rebound soon and any further adjustments for June and beyond won’t have to be as deep. But only time will tell on that.”
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