American Airlines has taken out a $1 billion loan and slashed 55,000 flights for April as the company president warned staff ‘we are in the fight of our lives’ amid the coronavirus pandemic.
The airline has taken out the loan ‘to strengthen our balance sheet’ as it expects ‘demand to fall even more before it gets better,’ President Robert Isom said in an email sent to staff on Thursday.
Isom warned staff there would be tough times ahead as the airline industry continues to be hammered by falling bookings.
‘This is a crisis unlike any we’ve faced in the past. Together, we will continue to be aggressive on all fronts so that we ensure American’s future is intact,’ he said.
‘While these steps are unparalleled in our history, we expect demand to fall even more before it gets better. More network reductions are being worked in real-time as we see bookings decline,’ said Isom.
He urged staff to work together to fight the ‘common enemy’.
‘We are in the fight of our lives, and we will win. Now is the time to come together and rally against a common enemy. The spread of COVID-19 stops with all of us following CDC guidelines, practicing social distancing and educating ourselves with facts. Likewise, our future starts with all of us providing essential air service to keep our country moving, taking care of each other and our customers, and building for a brighter day.’
The news of the loan was confirmed in a regulatory filling which showed the ailing business had secured the new year-long credit line, taking its available liquidity to $8.4billion.
Under the agreement, American must maintain a minimum aggregate liquidity of $2billion, according to Reuters.
Just hours earlier, the airline had announced plans to ground nearly half of its fleet and said that it would be slashing 55,000 flights scheduled for April.
The flight cuts include a 75% drop in international flights and 30% drop in domestic flights in April, with further cuts in the pipeline for May.
Additionally 130 of its widebody aircraft and 320 narrowbody aircraft will be grounded in April.
The drastic steps to salvage the US firm come as flight attendants slammed the airline for offering its pilots paid leave but not them.
As the company looks to make cuts by getting staff to take a voluntary leave of absence, pilots have been given three options including unpaid leave of absence of up to 12 months; permanent leave of absence, and paid short-term leave of absence of up to six months where they will get paid for 55 hours a month.
Flight attendants meanwhile have two options – both fully unpaid.
The Association of Professional Flight Attendants, which represents all 26,000 flight attendants at American, sent a letter to the the firm expressing that its staff were ‘highly offended’ by decisions around pay at this challenging time.
Meanwhile, Delta Air Lines is chief among the airlines using Marana Airfield in Arizona for storage, with FlightAware data showing 23 arrivals as of today, sending its wide-body jets including the Boeing 767.
The reduction in demand for long-haul air travel around the world in response to the spread of the novel coronavirus has lead global airlines to send their planes to Marana for storage where they will ride out the downturn in the desert sun rather than the cold.
The airline has stated that it will be grounding over 600 aircraft.