American Airlines seeking up to $12 billion from aid package: memo

CHICAGO (Reuters) - American Airlines Holdings Inc AAL.O intends to apply for up to $12 billion in government aid, ensuring no involuntary layoffs or pay cuts in the next six months, executives said in a memo to employees on Monday.

FILE PHOTO: An American Airlines airplane sits on the tarmac at LAX in Los Angeles, California, U.S., March 4, 2019. Picture taken March 4, 2019. REUTERS/Lucy Nicholson/File Photo

American is eligible for about $6 billion in payroll grants and $6 billion in loans under a stimulus package meant to help airlines and other businesses weather a downturn from the coronavirus.

Between the government funds and its own cash position, American will be able to fly “through even the worst of potential future scenarios,” Chief Executive Doug Parker and President Robert Isom said in the memo.

American, with the largest number of employees of any U.S. carrier, also plans to improve the terms of voluntary unpaid leave and early retirement options for flight attendants and other employees, it said.

American had 133,700 full-time employees in 2019, about 85% of whom were represented by unions. Wages and benefits are its largest operating expense, representing 34% of the total.

With airlines slashing their flying schedules as the coronavirus has crushed air travel demand, their need for pilots, flight attendants, mechanics and gate agents has fallen.

Delta Air Lines DAL.N said on Sunday that more than 21,000 of its employees had volunteered so far to take short-term, unpaid leaves of absence while it operates a reduced schedule.

Once demand returns, airlines say they will need trained staff ready to return to work.

Under the terms of the payroll grants, airlines cannot lay off any employees before Sept. 30.

“We certainly hope and expect that by that time, the virus will be contained, Americans will be flying again and we will be back to flying a full schedule,” American’s executives said.

Reporting by Tracy Rucinski; Editing by Sandra Maler and Peter Cooney