Two Big Airlines Back Off Plans to Cut Jobs Without Pay

ByABC News
September 27, 2001, 9:53 AM

Sept. 27 -- Airlines American and Northwest are reversing a decision not to provide severance to thousands of workers let go in the wake of the Sept. 11 terror attacks.

The two major airlines, which plan some 30,000 job cuts between then, faced criticism for not offering the separation package, particularly following rapid passage of a $15 billion airline bailout plan by Congress last week.

The Northwest package, offered to 5,500 furloughed contract employees, will include between one and six week's base pay, medical coverage and flight privileges, the company said. The airline said that managers whose positions will be eliminated also will receive relief packages. A total of 10,000 cuts are planned in all.

"After announcing our staff reductions last week, we continued to review our plan and have determined that this special relief package is appropriate to assist our employees who, under the current staffing reductions, have unexpectedly lost their positions at Northwest Airlines," said Richard Anderson, Northwest CEO. "We hope this will help them during this difficult period."

American Airlines also today said it would provide special pay, medical, travel privileges and other benefits to employees facing furloughs, but didn't say how many of the planned 20,000 layoffs the benefits would cover.

"Last Friday's passage of a federal aid bill, and the delivery of the first installment of aid to the airline this afternoon, will allow us to provide special pay and other benefits to employees who will leave us," said Donald J. Carty, chairman and CEO of American. "This is something we have wanted to do but were not sure we would be able to provide given our changing circumstances and the devastating impact of the terrorist attacks on our industry and our company."

He said the programs will be funded, in part, by a portion of the $900 million American received in federal aid after the terrorist attacks.

Airlines Invoked Emergency Clause

On Tuesday, Northwest and American said that they would invoke a so-called force majeure clause in their union contracts and would be firing employees without severance.