Yahoo Finance American Airlines Plans 30% Staff Cut, More Layoffs Likely
American Airlines Group AAL is planning to cut jobs in the management and support staff (“MSS”) team by 30%, per a letter to employees from Elise Eberwein, the company’s executive vice president of People and Global Engagement.
The airline is opening a new voluntary early-out program for MSS team members to volunteer through Jun 10. In case there are not enough volunteers, the company will resort to involuntary layoffs. Those laid off will remain under payroll through Sep 30 and continue to receive full compensation as per guidelines of the CARES Act.
The staff-reduction move is part of the carrier’s efforts to cut costs, the most significant being expenses incurred on compensations and benefits, as it prepares to operate a “smaller airline for the foreseeable future,” thanks to coronavirus-led travel demand slump.
American Airlines Group Inc. Price
American Airlines Group Inc. price | American Airlines Group Inc. Quote
As many as 39,000 American Airlines’ employees have voluntarily applied for unpaid leave or early retirement. The airline in its part plans to operate roughly 100 fewer aircraft next summer.
Apart from MSS staff reduction, the airline announced other cost-cutting measures, including suspension of the MSS merit program for 2020 and canceling an incentive plan.
Once the MSS team is right sized, American Airlines, carrying a Zacks Rank #3 (Hold), expects to evaluate employee reductions in its frontline team. Here too, the company plans to launch a voluntary leave and early out program (likely in June), before contemplating involuntary furloughs.
The need to reduce workforce in order to operate a smaller airline matching the current demand scenario has also been felt by other U.S. carriers like Delta Air Lines DAL and United Airlines UAL. Delta is offering voluntary early retirement options and buyout packages to employees. United Airlines is planning a similar move. Additionally, the airline has given a heads up of a 30% reduction in its administrative staff.
Both Delta and United Airlines carry a Zacks Rank #3.
A Key Pick
A better-ranked stock in the same space is Ryanair Holdings RYAAY, carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Ryanair has an impressive earnings history having outperformed the Zacks Consensus Estimate in each of the trailing four quarters, the average beat being 62.7%.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Ryanair Holdings PLC (RYAAY) : Free Stock Analysis Report
Delta Air Lines, Inc. (DAL) : Free Stock Analysis Report
United Airlines Holdings Inc (UAL) : Free Stock Analysis Report
American Airlines Group Inc. (AAL) : Free Stock Analysis Report
To read this article on Zacks.com click here.
