American Airlines Offers Severance Pay for Senior Managers

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American Airlines recently detailed severance pay for high-level employees if they are laid off when federal aid conditions expire in the fall, people familiar with the matter said.Severance pay for executives includes about nine months’ salary and just over two years of health care coverage for at least some of the employees at managerial level and above, one said.

Packages come as US airlines and others prepare to shrink and offer employees voluntary separation options as the coronavirus pandemic continues to weigh on demand. The virus and measures to end it have pushed airlines, including Delta, United and American, to their first quarterly losses in years.

The American declined to comment.

The terms of $ 25 billion in federal coronavirus relief set aside for US airlines’ payrolls prohibit carriers who agreed to help lay off or cut employee pay rates until September 30. Airline executives have warned that they expect to have to shrink to compensate for low travel demand.

At the end of last month, the American said he was aiming to cut management and support staff by about 30%, or about 5,000 jobs, starting with voluntary measures like buyouts. United also aims to reduce the ranks of its executives and administrative workers by 30%, or about 3,400 people, it said last month. United, Southwest and Delta have offered voluntary separation packages for other workgroups, such as flight attendants and customer service employees.

According to someone familiar with the matter, Delta executives are discussing what voluntary termination programs for executives might look like. Delta did not provide details of any voluntary executive packages or involuntary severance payments that may include. Southwest and United did not respond to a request for comment on Sunday.

At the end of May, American offered buy-outs and retirement packages for management and support staff, an effort to remove employees from the payroll and avoid involuntary layoffs. The buy-back options include one-third of salary and full medical coverage until December 31, as well as five years of travel benefits. The airline has told management and support staff that if they are involuntarily dismissed later, they will not be dismissed. However, under the terms of federal assistance, they will be paid until September 30.

“If there are not enough volunteers to leave, we will have to get through the difficult step of involuntary separation,” said Elise Eberwein, US executive vice president for people and global engagement, in a staff note. May 27, describing these options. She added that the reductions will be communicated to employees in July and that these employees will receive one year of travel benefits and will have access to COBRA health coverage for 18 months. The deadline to volunteer for buyouts and early retirements is Wednesday.

Senior workers, a group who have recently experienced cutbacks and who may receive severance pay if they are involuntarily reduced, may have more difficulty finding work at their level than other workers, said Tom McMullen, principal client associated with the organizational consultancy. Korn ferry.

Severance benefits “tend to go up for senior managers,” said McMullen. “Managers do not find a new job in a month. They could find a job in a year. ”

He added that it will likely be difficult for the dismissed airline workers compared to those of a single company in difficulty, as the “industry is fighting for its life”.

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