As American Airlines awaits the decision from Congress on a fresh injection of CARES Act funding, the airline has extended the window for employees to apply for voluntary separation until the middle of the month. As many as 25,000 workers have been warned that their job could be at risk when the funding runs out at the end of September.
Voluntary exit window extended to August 17th
American Airlines has advised its employees that the window to apply for voluntary redundancy has been extended. In a letter seen by Reuters, the airline said it would keep the option open for its workers until August 17th.
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This comes as the airline faces uncertainty over a further bailout from the government. It is hoping Congress will approve another $25 billion of payroll assistance to support aviation companies affected by COVID beyond the end of September.
The current CARES Act has provided wage support for tens of thousands of workers in the aviation sector since the pandemic shut down much of the industry. Part of the requirement of this funding was that the airline did not lay off or furlough any workers while they were under the scheme. But with the scheme due to end on September 30th, thousands of airline workers are concerned about their jobs.
American Airlines warned in July that as many as 25,000 frontline workers may have to be laid off. The job cuts represent almost 30% of the airline’s workforce, a similar proportion of job cuts as has already been seen in its corporate staff. The airline is seeking to ensure the maximum number of these job losses are done on a voluntary basis, rather than compulsory.
Why leaving voluntarily is preferable
Employees agreeing to leave the airline of their own volition is a preferable solution to having to enforce redundancy on a compulsory basis. There are a couple of reasons for this.
For the worker, voluntary redundancy typically comes with more in terms of financial compensation than compulsory packages do. Airlines are likely to heavily incentivize this action, meaning the workers could end up with a better deal than if they hang on to their jobs but then get made redundant anyway.
For the airline, compulsory redundancies must follow a bottom-up approach. This means that the most junior and lowest-paid workers will go first, often leading to several jobs being lost in place of one more highly paid job. If those highly paid, experienced workers choose to leave voluntarily, it means several jobs could be saved lower down the management tree.
It’s a painful decision for anyone to make, but for those nearing retirement age or looking for a change of career, it could be a great opportunity.
Of course, if Congress does approve the CARES Act funding for a further six months, workers will have their jobs assured for longer. But with travel demand predicted to be sluggish for several years to come, some might say that this would only be delaying the inevitable even further.