On Tuesday, American Airlines warned employees that it would cut up to 19,000 workers on October 1st. The airline announced that there was little sign that the coronavirus-induced reluctance for travel was diminishing. The airline is looking to cut thousands of gate agents, pilots, technicians, pilots, flight attendants, and other staff. The company expects to have around 40,000 fewer employees on October 1 than it did before the pandemic, including leaves of absence, buyouts, and retirements. There will be a 30 percent decline in its workforce.
American Airlines is just one of the recent airlines to forecast terrible news. Earlier this summer, United Airlines announced that it could furlough as many as 36,000 employees in the fall. Furthermore, on Monday, Delta Air Lines warned that it might have to furlough as many as 1,941 pilots in October. This was even after nearly as many pilots had accepted buyouts. Weak demand is spurring these moves.
The airlines also seek to put pressure on the Trump administration and Congress to strike a deal on another coronavirus stimulus package. Under a March legislative package, passenger airlines received $25 billion to help pay workers with American alone, receiving $5.8 billion.
Evidence mounts that the once-strong economic recovery is losing steam. In July, hiring slowed. Moreover, various indicators are suggesting that it had slumped further in August. Weekly claims for benefits for unemployment have jumped back above one million. Thus, this reversed the previous gradual decline. On Tuesday, new data showed that, since the pandemic took hold, consumer confidence fell in August to its lowest level.
Airlines and Others
Economists attribute the slowdown, at least partially, to the waning federal support for businesses and families. Congress approved the $600 a week in extra unemployment benefits in March. However, it has expired at the end of July. The Paycheck Protection Program provides low-interest loans and grants to small businesses. Nonetheless, this program ended this month. Starting in mid-April, the $1,200 tax rebates appeared in mailboxes and bank accounts. Nevertheless, it has not been repeated. Airlines are struggling because of the coronavirus pandemic.
Months ago, House Democrats passed a bill that would replace or extend many of those programs. Meanwhile, Senate Republicans have struggled to coalesce around generally smaller measures. Efforts to find a compromise between the administration and Democrats collapsed. Without reaching a deal, Congress left town for its summer recess. Furthermore, this month, the United States President Donald Trump announced a series of executive actions to help unemployed workers and others.
Nevertheless, those programs have been slow to roll out. This diverted existing funds instead of doling out new aid. Only Congress is able to allocate new funds. Time is running out for many businesses. On the positive side of things, though, COVID-19 cases are falling.
Nevertheless, it remains high in much of the country. Thus, it makes a full reopening of the economy impossible. Entire sectors, such as travel, entertainment, and hospitality, remain either severely restricted or shut down. So, experts are warning that, the more lasting the damage will be, the longer the crisis persists. Short-term business closures will lead to bankruptcies; furloughs will turn into permanent job losses.
- Trading Instrument