American Airlines has said it will lay off or involuntarily furlough 19,000 employees as of October 1 unless the airline industry gets more help from Congress.
The world's largest airline, which had 133,700 employees heading into this year, said it will need to reduce headcount by at least 40,000 employees, reports CNN.
It said that 12,500 had agreed to leave the company with early retirement or buyout packages, and another 11,000 had agreed to voluntary furloughs for October.
"Even with those sacrifices, about 19,000 of our team members will be involuntarily furloughed or separated from the company on October 1, unless there is an extension of the (federal help)," said a letter sent by American CEO Doug Parker and President Robert Isom to employees.
American said layoff notices were sent out on Tuesday to 17,500 employees. Under terms of the Coronavirus Aid, Relief and Economic Security (CARES) Act which provided up to 50 billion dollars of help to the US airline industry, airlines could not lay off or involuntarily furlough staff until October 1.
"The only problem with the legislation is that when it was enacted in March, it was assumed that by September 30, the virus will be under control and demand for air travel would have returned," said the letter.
"That is obviously not the case. Based on current demand levels, we at American now plan to fly less than 50 per cent of our airline in the fourth quarter with long-haul international particularly reduced to only 25 per cent of 2019 levels," they added.
CNN said the airline also announced last week it will suspend service to 15 US smaller markets in October as a cost-cutting move. Cutting service to cities it had served is another measure that the CARES Act prohibited before October.
The airline industry and its unions are pushing for an extension of the help but it is tied up with the discussion of other economic aid packages being considered, including enhanced unemployment benefits and help for state and local governments.