American will make 30% of its workforce redundant as it resizes its operation in response to the impact of COVID 19 the carrier said in a letter to employees.
“Although our pre-pandemic liquidity, the significant financial assistance provided by the government, and the cash we’ve raised in the capital markets provide a foundation for stability, we need to reduce our cost structure, including our most significant expense - the cost of compensation and benefits.
And we must plan for operating a smaller airline for the foreseeable future,” said executive vice president of people and global engagement Elise Eberwein said in the letter.
The letter said that nearly 40,000 American employees had already taken either voluntary leave or early retirement and the airline was accelerating its fleet retirement schedule with a 100 fewer planes expected to fly in the summer of 2021 but that the firm still needed to lay off a further 30% of its workforce.
All major US airlines have said they will need to reduce headcount, once US government payroll aid that bans enforced job cuts expires on September 30.
Air Canada says it will use the cash to supplement its working capital and other general corporate purposes.
The airline said on May 4 it had $6.5 billion in unrestricted liquidity after drawing about $1 billion in March from its revolving credit facilities.
The carrier lost more than $1 billion last quarter and grounded the vast majority of its fleet as travel demand hovers near ground level while fixed costs persist, including aircraft leases, insurance and maintenance and hangar fees.