American and United are warning employees of furloughs as a slow vaccine rollout dampens expectations for recovery this year

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American and United are warning employees of furloughs as a slow vaccine rollout dampens expectations for recovery this year
American Airlines and United Airlines planes at Los Angeles International Airport.Kit Leong/Shutterstock.com
  • American Airlines and United Airlines are warning thousands of workers to prepare for furlough come April.
  • Executives are blaming a lack of demand on new travel restrictions and a slow vaccine rollout.
  • Hawaiian Airlines also informed labor authorities that over 800 employees may be furloughed.

Two of the country's largest airlines are gearing up for another round of furloughs in April as the Payroll Support Program is set to expire and travel shows no signs of markedly improving before spring.

United Airlines and American Airlines, unsurprisingly, have said around 13,000 of their employees will be furloughed come April as external factors continue to hinder aviation's slow-going recovery. In a letter to employees, American executives cited new international travel restrictions that require a negative COVID-19 test to enter the country and a lagging vaccine rollout as primary reasons for concern.

"The vaccine is not being distributed as quickly as any of us believed, and new restrictions on international travel that require customers to have a negative COVID-19 test have dampened demand," Doug Parker, American's CEO, and Robert Isom, American's president, said in the letter.

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Parker and Isom said they initially thought furloughs wouldn't be necessary as the emergency authorization of two coronavirus vaccines and the pent-up demand for travel was thought to boost summer bookings.

"As we closed out last year with the successful extension of the Payroll Support Program (PSP), we fully believed that we would be looking at a summer schedule where we'd fly all of our airplanes and need the full strength of our team," Parker and Isom said. "Regrettably, that is no longer the case."

At American, flight attendants will be the most impacted with 4,245 out of the approximately 13,000 notices planned to be sent to that workgroup as of February 3. Fleet service workers - including baggage handlers - and pilots are the next impacted with 3,145 and 1,850 notices, respectively, being issued to those workgroups.

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On Capitol Hill, airline unions are already pushing Congress to extend the Payroll Support Program to prevent the impending round of furloughs set to occur on April 1, the industry's new judgment day. Sara Nelson, the international president of the Association of Flight Attendants-CWA, testified before the House Committee on Transportation and Infrastructure on February 4 to make the business case for keeping the program going.

"A PSP extension through September 30, 2021, will keep hundreds of thousands of airline workers current with certifications and security clearances that will be necessary when more normal travel can resume," Nelson said.

"We are fully behind our union leaders' efforts to fight for an extension and we will lend our time and energy to support this effort in every way we can," Parker and Isom said.

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The most-recent stimulus bill passed in December 2020 saw $15 billion for airlines to bring back furloughed workers but executives were already saying that the recalls would likely not be permanent.

"The truth is, we just don't see anything in the data that shows a huge difference in bookings over the next few months," United CEO Scott Kirby and President Brett Hart wrote in a December letter to employees. "That is why we expect the recall will be temporary."

Just one month later, their predictions have proved to be accurate and the company plans to furlough around 14,000 employees after March 31, according to an internal memo viewed by CNBC.

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"Despite ongoing efforts to distribute vaccines, customer demand has not changed much since we recalled those employees," executives reportedly wrote in a January memo.

Hawaiian Airlines is also preparing to furlough workers, though the airline told labor officials in the 50th state that only around 800 will receive notices. Travel to Hawaii has picked up as the state has adopted a testing strategy for visitors but the airline says demand is not high enough to maintain its workforce.

The nation's airlines have been languishing with historically low passenger numbers despite a promising holiday travel season that saw millions take to the sky in the days surrounding Christmas and Thanksgiving. New statistics from the Transportation Security Administration also reveal that only three days in 2021 have seen daily passenger numbers for US airports surpass one million.

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If Congress does pass another round of support, the cycle will only continue until demand picks up, which can take months as public health officials are warning even vaccinated Americans not to travel.

"Getting vaccinated does not say now I have a free pass to travel," Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, said at a CNN town hall.

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