American Airlines Group Inc (NASDAQ:AAL) plans to cut flight services to up to 30 small destinations as conditions under the CARES Act loans come to an end. According to one of the company’s executives, who did not want to be revealed because the matter is still under review.
It is said that the airline could scrap services to several routes as early as next week with the expiry of the requirements under the act. American is yet to give specific detail on the routes that will be affected with the requirements coming to an end on September 30.
CARES Act prohibits carriers from layoffs
Under the $25 billion federal aid package called CARES Act, airlines are prohibited from laying off employees through the end of the third quarter. American Airlines got $5.8 billion under the program.
The federal government bailout program was designed to preserve jobs and sustain the country’s airline industry. The assistance went towards providing payroll assistance. On some routes, however, airlines have been flying planes with fraction capacity.
Talks for another aid package
Unions and airlines in America have been pushing for a second aid package from the government. With the virus showing no signs of slowing down, the airline industry’s recovery is not in the foreseeable future.
Unions and airlines are pushing for another $25 billion bailouts for the airline industry to support payroll through the end of March 2021. With the COVID-19 pandemic still causing havoc worldwide, travel is still restricted in several places around the world. Air travel, therefore, remains deeply depressed.
The proposal for a second bailout has gained President Trump and politicians from both sides in Congress. However, its rollout has stalled due to failure by lawmakers and White House to reach a deal on a new COVID-19 aid package that would include the additional aid for the airline industry.
United Airlines Holdings Inc (NASDAQ: UAL) will not be cutting services to a low-demand destination because the company says it has seen a significant recovery in these destinations.