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It appears that American Airlines is planning to lay off 30% of management and administrative staff.
LAYOFF? BUT WHAT ABOUT THE CARES ACT?
You may remember a few months ago, Treasury Secretary Steven Mnuchin said the following:
“The Payroll Support Program is critical to supporting American workers and preserving our airline industry, which is a vital part of the U.S. economy.”
Then an announcement was made that airlines would be receiving nearly $50 billion (with a “B”) in loans and grants through the CARES Act. One of the stipulations to obtaining this money was the money had to used to pay front line workers, including pilots, flight attendants and mechanics and that the airline couldn’t involuntarily lay off any employees until at least 1 October 2020.
As expected, most airlines have not hidden the fact that 1 October will be rough given they are planning to become smaller airlines. But while they can’t INVOLUNTARILY lay anyone off until 1 October, they can offer a package so you VOLUNTARILY separate.
In an attempt to rein in expenses, American Airlines plans to offer the following “packages:”
The first (voluntary) package includes:
- Last day worked = mid-June
- Pay: Receive 6 months at 33% through 31 December 2020
- Medical: Employees will receive active rates for 6 months (and then 18 months COBRA)
- Travel: Receive active travel benefits through December, 5 years of D2R status after separation, and retiree travel eligibility will be reduced by five years
- Additional “Bonus:” Receive 250,000 AAdvantage miles
The second (voluntary) package includes:
- Last day worked = mid-June
- Pay: Receive 3 months at 33%, through 30 September 2020
- Medical: Employees will receive active rates for 21 months
- Travel: Receive active travel benefits through September, 10 years of D2R status after separation, and retiree travel eligibility will be reduced by five years
- Additional “Bonus:” Receive 350,000 AAdvantage miles
If neither of these packages are selected, employees clearly have the “choice” of the accepting the inevitable:
The third (involuntary) package includes:
- Last day worked = mid-July
- Pay: Receive 3 months at 100%, through 30 September 2020
- Medical: Employees will receive active rates through 30 September 2020 (and then 18 months COBRA)
- Travel: 1 year of D2R status after separation
- Additional “Bonus:” None
In other words, what is your priority…money (package 1) with a few “perks,” healthcare (package 2) with a few “perks,” or waiting it out with no “perks?”
Less than 30 days ago, United Airlines made it clear that they would be laying off about 30% of their employees and American Airlines CEO Doug Parker said that it will “illegal” citing the CARES act. Now, here he is doing the exact same thing.
I also find it interesting that American plans to lay off all these employees by mid-July, but keep paying them. I presume employees won’t be able to file for unemployment because they’re still “working,” no?
Regardless, it appears many AA employees have an interesting choice to make over the next few weeks.
What do you think about the available “choices?” Which package would you choose?