American Airlines plans to apply for aid, offers partial pay

American Airlines jets sit idly at their gates Wednesday, March 25, 2020, at Sky Harbor International Airport in Phoenix.

Matt York | AP

American Airlines on Monday said it will apply for government aid to soften the blow from a record drop in travel demand. The carrier is also offering partial pay to entice workers off its payroll.

The Fort Worth-based airline said it expects about $12 billion of the $50 billion set aside for airlines in a sweeping coronavirus relief bill Congress passed last week. The aid includes $25 billion in grants for passenger airlines in exchange for not furloughing or cutting the pay rates of their employees through Sept. 30. The other half is in loans.

American’s statement that it will apply for the funding is the clearest yet from airlines on the coronavirus aid as executives parse through the details. The rescue package came with some strings attached to it, including equity stakes for the federal government and requirements for carriers to keep paying employees and maintain certain air routes.

“We intend to apply for these funds and are confident that, along with our relatively high available cash position, they will allow us to fly through even the worst of potential future scenarios,” American’s CEO Doug Parker and the airline’s president, Robert Isom, said in a note to employees.

American is also making voluntary leaves of absence and early retirements partially paid, an attempt to get more workers to sign up. American and other carriers had been offering voluntary unpaid leave to try to lower costs.

Mainline American employees, except for pilots, could receive 25% of their pay for leaves of up to 12 months. They would continue to receive medical benefits. Employees who have been with American for 10 years can receive half of their pay for 12 months. 

Other airlines are also offering voluntary leaves of absence to workers. Delta’s CEO Ed Bastian on Friday said 21,000 Delta employees have volunteered for unpaid leave of various lengths, nearly a quarter of the full-time-equivalent employees the airline had at the end of the year.

“We could use more volunteers,” Bastian said in a memo to employees.

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