American Airlines Shares Slide Amid Furlough Warning to 13,000 Workers

Travel restrictions and slow COVID vaccine rollouts could hamper the airline sector's recovery this year, CEO Doug Parker warned yesterday in a memo to the carrier's 130,000 workforce.
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American Airlines Group Inc.  (AAL) - Get Report shares slumped lower Thursday after the biggest U.S. carrier warned that as many as 13,000 employees, or 10% of its global workforce, could be furloughed in the coming months.

American said restrictions on international travel, as well as slower-than-expected vaccine rollouts in the United States and Europe would continue to blunt demand, and echoed calls from rival United Airlines UAL for another $15 billion in payroll support from Congress as part of President Joe Biden's $1.9 trillion stimulus bill.

Earlier this week, the International Air Transport Association lobby group said COVID-related travel restrictions, including mandatory quarantines, could harm the industry's recovery prospects, and forecast overall traffic at just 38% of 2019 levels. 

"We are nearly five weeks into 2021, and unfortunately, we find ourselves in a situation similar to much of 2020," CEO Doug Parker said in a memo to airlines employees Wednesday. "The vaccine is not being distributed as quickly as any of us believed, and new restrictions on international travel that require customers to have a negative COVID-19 test have dampened demand." 

American Airlines shares were marked 1.2% lower in early trading Thursday to change hands at $17.40 each. 

American posted an adjusted loss of $3.86 per share over the fourth quarter, as revenues fell 64% to $4 billion amid a plunge in air traffic and travel linked to the ongoing pandemic. 

“As we look to the year ahead, 2021 will be a year of recovery. While we don’t know exactly when passenger demand will return, as vaccine distribution takes hold and travel restrictions are lifted, we will be ready," Parker said.