Did American Airlines Receive Billions in Federal Aid Then Lay Off 30,000 Employees?

A tweet attempted to raise the alarm on the airline's alleged pay discrepancies for rank-and-file workers.

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Claim

During the COVID-19 pandemic, American Airlines received almost $7 billion in PPP loans from the federal government but still laid off 30,000 employees. Meanwhile, the airline's CEO collected almost $11 million in compensation.

Rating

What's True

CEO Doug Parker took home almost $11 million in 2020. Also, it's true the airline's workforce decreased by roughly 30,000 positions between 2019 and 2020, and that it accepted billions of dollars in federal funding to financially survive the pandemic. However...

What's False

Those federal loans and grants were not part of the CARES Act's Paycheck Protection Program (PPP), and totaled more than $12 billion — not $7 billion. Additionally, the airline had fewer workers in 2020 than 2019 for reasons other than widespread layoffs.

Origin

In June 2021, as airlines experienced a surge in demand, multiple news outlets reported that American Airlines (AA) was cutting about 1% of its flights in the coming weeks amid bad weather and labor shortages. Reuters reported: “American Airlines said the incredibly quick ramp up of customer demand also came at a time when bad weather caused multi-hour delays over the last few weeks, disrupting flight and crew work hours. The company said some of its vendors were also struggling with labor shortages, impacting the airline’s operations.”

Responding to that latter reason for the cuts, one Twitter user authored the below-displayed tweet that makes several claims about the company’s budgeting during the COVID-19 pandemic and allegedly explains why AA was struggling to fill job positions.

We contacted the tweet’s author to learn their process for composing the post, as well as their potential connection to the airline. We have not received a response, but we will update this report when, or if, that changes.

Nonetheless, the tweet includes the following claims:

  • That at an unknown date, AA received $7 billion from the federal government’s Paycheck Protection Program (PPP) — a loan system that was established via the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) to help small businesses pay workers during the pandemic.
  • That American CEO Doug Parker earned almost $11 million during an unspecified amount of time presumedly during the COVID-19 crisis.
  • That the company “laid off” 30,000 employees of unknown positions over the course of an undetermined amount of months, beginning in January 2020.

But, before we proceed, let us note here: The airline’s communication team’s statements to news media regarding the upcoming flight cancellations through mid-July (see CNN’s story here, CNBC’s coverage here, and NBC’s article here), including to Snopes, said “labor shortages [among] some of our vendors” (emphasis added) were affecting operations. See the statement we received, for example:

That umbrella term, “vendors,” could include companies that operate independently but have a contract with American to provide goods or services for its flights, such as aircraft equipment manufacturers or business that sell blankets or pillows for passengers.

Snopes asked a company spokesperson what vendors, specifically, faced employment gaps and impacted flights, and he did not answer the question.

While the spokesperson shared other comments (which we included in the sections below), he also did not share a response to critics who believed the company should shift around funds, including those provided by the federal government, so that the CEO received less compensation and rank-and-file staff earned higher paychecks. For that reason and others, this fact check does not address that underlying argument of the tweet.

Claim: Did AA Receive Almost $7 Billion In PPP?

Not quite — but the airline company did take advantage of other federal grants and loans.

Let us explain that conclusion. Only companies that qualified as a “small businesses” (criteria here), or had 500 or fewer employees, were eligible for PPP loans. American, on the other hand, documented about 133,700 full-time employees, ranging from pilots to flight attendants to mechanics, federal regulatory documents showed.

Rather, AA utilized the government’s Payroll Support Program (PSP), a different financial boost established by the CARES Act that provided $25 billion for various airlines’ payroll expenses.

The U.S. Department of the Treasury distributed the money, in part, based on air carriers’ payroll expenses from April 2019 through September 2019, and said it “must exclusively be used for the continuation of payment of employee wages, salaries, and benefits.”

According to that federal agency’s database of recipients and AA spokesperson Matt Miller, American was budgeting with $12.7 billion from the program, as of this writing. The majority of that amount (almost double what was described in the viral tweet) was one-time grant money, while about one-third represented loans that the airline carrier needed to pay back.

“These funds ensured we could keep our team members on payroll throughout the pandemic despite the significant drop-off in demand for air travel,” wrote Miller in an email to Snopes.

Claim: AA CEO Made Almost $11 Million

Yes, Parker, who is paid almost entirely in stock awards, took home $10.66 million in total compensation in 2020, according to Miller and The Dallas Morning News. (The carrier’s headquarters is located in Dallas-Fort Worth, making the Dallas newspaper a primary source of news about it.)

That compensation was based on the company’s profits in 2019 (so it did not factor in the financial struggle of the pandemic), and was his smallest paycheck since taking the helm. The newspaper reported: “Parker’s compensation has mostly hovered between $11.1 million and $12.3 million a year during his time as CEO, with the exception of 2013 when he made $17.6 million based largely on bonuses he had for merging his former airline, US Airways, with American Airlines.”

Parker gave up his cash salary in 2015 to move to the all-stock compensation plan, along with benefits including flights and life insurance premiums. Miller told us: “Being paid in stock ensures his compensation is at-risk, based on the results the company achieves, and aligned with our shareholders’ interests,” he said. “Doug’s realizable compensation for 2020 was considerably less — approximately $2.9 million, or 23% of the target.”

Claim: AA Laid Off 30,000 Employees During Pandemic

This is false. While the company did cut some supervisor and support staff jobs, and it was true that its workforce overall declined by about 31,000 positions in 2020, it was erroneous to attribute that decrease exclusively to involuntary layoffs.

According to annual reports to the U.S. Securities and Exchange Commission obtained by Snopes, AA’s payroll indeed shrunk from about 133,700 full-time employees at the end of 2019 to roughly 102,700 such workers. That was a 23% workforce reduction, totaling about 31,000 positions.

However, neither those regulatory documents, nor a news story by the Dallas Business Journal about them, said that decrease was because executives enacted widespread layoffs.

It was true American briefly furloughed 19,000 employees in fall 2020 and then brought them back weeks later, after the company secured more PSP funding from the federal government.

Then, months later, news reports said the company warned 13,000 employees of possible lay offs, pending the country’s rate of vaccinations and interest in traveling. As of this writing, however, those worker remained in their jobs, Miller told Snopes.

But, as we noted, there were some permanent job losses during the pandemic. The airline cut about 30% of its management and administrative positions, totaling roughly 5,000 jobs, according to news reports and Miller.

Those were the only involuntarily layoffs, based on our research. We found no evidence of widespread layoffs for employees who maintain the company’s operations or deal with customers, like the tweet implied.

Rather, Miller said, the company documented tens of thousands fewer workers in 2020 compared to 2019 because it had expanded its “early out program.” A slew of front-line workers agreed to voluntarily terminate their employment to take advantage of severance benefits, or to leave the company for months on end for partial compensation.

“Ultimately our headcount is smaller than it was before the pandemic, but the vast majority of that reduction is from voluntary departures,” Miller said. “Any front-line employees who departed the company did so voluntarily via an early out program. The only involuntary departures were on the management side.”

In sum, we rate this multi-pronged claim a “Mixture” of true and false information.