American Airlines expects 10% to 20% more workers than required in July 2021

American Airlines expects 10% to 20% more workers than required in July 2021
  • American Airlines expects 10% to 20% more workers than required in July 2021.
  • Delta Air Lines may place 2,500 pilots on furlough as Coronavirus drags on demand.
  • Spirits AeroSystems extends furlough of its 737 workforce through 14th August.

The Coronavirus pandemic brought demand for air travel to a near halt in recent months. As governments restricted people to their homes, several airlines resorted to grounding fleets, layoffs, and furloughs to shore up finances amidst COVID-19. Spanish airline Iberia recently expressed plans of downsizing its fleet and limiting the destinations that it flies to.

In latest news, CEO Doug Parker of American Airlines (NASDAQ: AAL) said on Saturday that the airline’s workforce is likely to be 10% to 20% larger than required in July 2021. Under such circumstances, he told employees, it will be tough to avoid furloughs. Delta Air Lines also warned late on Friday that it may be pushed into placing about 2,500 pilots on furlough as the pandemic continues to wreak havoc on the industry.  

Shares of American Airlines closed at £10 per share on Friday that represents more than 50% decline year to date in the stock market after recovering from an even lower £7.33 per share in mid-May. At the time of writing, the U.S. air carrier has a market capitalisation of £5.10 billion.

U.S. government payroll aid to expire in October

The U.S. air carriers expect deeper furloughs later this year in October as the government payroll aid expires. Airlines are currently encouraging workers to sign a voluntary exit agreement as the CARES Act that injected £25.94 billion in the U.S. aviation space disables them from involuntary furloughs.

The U.S. aviation unions have already requested the U.S. Congress to consider extending the support scheme until March 2021. As per American Airlines, its workforce will be about 20% to 30% larger than required in October with CEO Parker expecting furloughs to primarily affect flight attendants and staff other than pilots. American Airlines said last week that it will raise £2.83 billion in new financing to boost liquidity amidst COVID-19.

Spirit AeroSystems to extend furlough through 14th August

In separate news from the aviation industry, Spirit AeroSystems Holdings (NYSE: SPR) revealed to have extended furlough of its 737 workforce through 14th August. Spirit is the world’s largest 1st-tier aerostructures manufacturer and a prominent supplier for Boeing. Spirit’s struggle in recent months is ascribed not only to COVID-19 but also to Boeing’s 737 MAX that is grounded since last year.

A certification test campaign under the U.S. FAA (Federal Aviation Administration) for 737 MAX that will span over three days is scheduled to begin on Monday. The £77.76 billion aeroplane maker is currently just under 50% down year to date in the stock market.

By Wajeeh Khan
Mr. Khan specialises in Public Health by academia but is a trader by passion. Taking up two new hobbies of writing and trading in his teen years, he is now a professional trader and news writer with over 5 years of experience in various financial markets. Khan is passionate about bringing insightful articles to his readers and hopes to add value to their portfolios.
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