American Airlines (NASDAQ:AAL) has reportedly detailed severance packages recently for high-level employees if they are laid off when the terms of federal aid expire in the fall.
The severance packages for upper management include around nine months of pay and a little over two years of health-care coverage for at least some of the employees at the director level and above, one of the people said.
The packages come as American and other airlines are preparing to shrink and offer employees voluntary separation options as the coronavirus pandemic continues to hurt demand. The virus and measures to stop it have pushed airlines including Delta, United and American to their first quarterly losses in years.
The terms of $25 billion in federal coronavirus relief set aside for U.S. airline payroll prohibit carriers that accepted the aid from laying off or cutting the pay rates of employees through Sept. 30.
Airline executives have warned they expect they will have to shrink to compensate for weak travel demand.
American late last month said it aims to reduce management and support staff by about 30% or around 5,000 jobs, starting with voluntary measures like buyouts.
United also aims to reduce the ranks of its management and administrative employees by 30%, or around 3,400 people, it said last month. United, Southwest and Delta have offered voluntary separation packages for other work groups, such as flight attendants and customer service workers.
AAL stock, nonetheless, took flight 82 cents, or 4.4%, to $19.41.
