The pandemic of the COVID-19 virus has caused American Airlines to make some unfortunate decisions. For example, it was forced to take out loans to cover its losses because its competitors, Southwest Airlines and Spirit Airlines, were doing very well. American Airlines has been borrowing money to pay back loans and stay in good financial standing with its investors, such as hedge funds. These monetary funds will not be available for many years and are extremely important because they allow major airline companies to borrow money from banks. The competition between Southwest and American Airlines has also caused the loss of many pilots, which has resulted in a decimation of its pilot workforce.
American Airlines has also taken concessions from its employees to help keep its finances afloat. One reason for this is because it was forced to cut the salaries of many employees. The airline industry spends a lot of money on employee wages, so when American Airlines had to cut down on them to compensate for the lack of business, it was not going to be able to survive in the long term with such a low level of profitability. Employees who were once highly regarded professionals have seen their careers collapse due to this financial decline. It is very common to see pilots, flight attendants, and other high-level workers crying during interviews. This is because they have lost their jobs and cannot support their families and remain on top of their bills. Additionally, office workers and other administrative personnel have also been affected by this issue.
The COVID-19 virus has caused American Airlines to lose over $4 billion and forced the airline industry to experience a major financial meltdown, just like the Great Recession of 2008. American Airlines is estimated to have lost at least $2.8 million per day due to its inability to implement its flight schedule properly. It has been forced into bankruptcy, which is very common with many other airlines worldwide experiencing similar situations. American Airlines even had to cut down its flights from 260 daily flights down to 160 to remain profitable and stay in the skies.
American Airlines has also been forced to cancel many flights due to the COVID-19 virus. The cancellations are becoming so severe that they could soon lead American Airlines into bankruptcy like its competitors. American Airlines already had a huge amount of debt, which is why it was forced to take out loans to stay afloat. When a company is in financial trouble like this, its financial standing becomes more vulnerable than ever before.
The cost and effects of the COVID-19 virus outbreak on American Airlines are severe. The COVID-19 outbreak has caused American Airlines’ competitors to become financially unstable, leading to the loss of many jobs. The financial losses have been so great that the company is continuously taking on large amounts of debt, leading it to bankruptcy in the future. American Airlines also has suffered losses in luggage and other items and its inability to transport many passengers due to security measures being taken by many airlines after the virus outbreak. American Airlines has had to eliminate many jobs due to the financial issues and the volatile nature of COVID-19.
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