American Airlines Will Slash Even More Routes Without New Stimulus Funds, CEO Warns


American Airlines CEO Doug Parker told CNBC that without more federal aid to the airline industry—something that looks increasingly unlikely as politicians in Washington—the major U.S. carrier will have to discontinue service to more U.S. cities in order to stay afloat.

Key Facts

American in August announced cuts to more than a dozen cities through November, and last week began furloughing 19,000 employees because of the expiration of the first round of federal aid to the industry on October 1. 

As part of a payroll support program under the CARES Act, ten U.S. airlines received $25 billion in federal relief money in exchange for agreeing to retain 90% of their staff, limit executive pay, and curb stock buybacks and dividend payments. 

“There is enormous bipartisan support for an extension of this payroll support program,” Parker said. 

The 19,000 furloughs could be reversed, the airline said, if Washington is able to deliver more aid to the industry. 

Other airlines have also struggled as the coronavirus flattened traveler demand: United last week began furloughing 13,000 workers, and Delta and JetBlue have also suspended service to certain cities for an indefinite period.  

Crucial Quote

“We can’t continue to wait,” Parker said Thursday. “If forced to, of course, we will indeed discontinue service to a lot of markets and we will be much slower to rebound and help the country rebound from this pandemic.”

Key Background

On Thursday morning, House Secretary Nancy Pelosi (D-Calif.) said that she would not support any standalone coronavirus aid bill—including one with payroll support for airlines—without a comprehensive relief package. Her comments come after a week filled with contradictory statements from President Trump about the state of negotiations over the next aid bill in Washington. On Tuesday, Trump announced that he had directed his staff to stop stimulus talks until after the election. Hours later, he said that several piecemeal bills were on the table, including for the airline industry and for another round of stimulus checks. On Thursday morning, Trump said that broader negotiations were back on again.   

Further Reading

Pelosi Says No Standalone Stimulus Bills—Including Airline Aid—Without Comprehensive Deal (Forbes)

Pelosi Slams Trump Over Stimulus Talks Withdrawal, Standalone $1,200 Check Push (Forbes) 

Airline Stocks Claw Back Losses Amid Trump Stimulus Whiplash (Forbes)

Airlines Could See More Relief Ahead Of Stimulus Deal, Pelosi Says (Forbes)

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