Airplanes sit on the tarmac at John F. Kennedy Airport (JFK) on January 31, 2020 in New York City.
Spencer Platt | Getty Images
U.S. airlines on Saturday warned they will have to furlough workers unless Congress approves a $58 billion aid package that includes grants, not only loans, as the industry reels from the impact of coronavirus.
Senate Republicans last week proposed legislation that included a $58 billion in aid for passenger and cargo carriers, but in the form of loans airlines would later have to repay.
“Time is running out,” wrote the CEOs of Southwest, Delta, Alaska, American, United, JetBlue, Hawaiian, UPS Airlines and FedEx, and their lobbying group, Airlines for America, to congressional leaders. It was one in a series of grim messages from airline chiefs and labor unions this week about the abrupt collapse in bookings that coronavirus caused and the potential toll on workers. “Unless worker payroll protection grants are passed immediately, many of us will be forced to take draconian measures such as furloughs.”
U.S. airlines employ close to 750,000 people and large carriers are now shrinking their international networks to the smallest in decades, cutting thousands of domestic flights, parking hundreds of jets and urging employees to take unpaid leave, in a bid to save cash as demand crumbles.
Hundreds of aviation workers are already out of a job. Some 2,400 airport concession worker have been idled as have close to 300 catering workers, according to the Unite Here union. Minneapolis-based Compass Airlines, a regional carrier with 1,300 employees, said last week that it plans to shut down after its clients, Delta and American, reduced flights.
Delta said Friday that it expects its second-quarter revenue to fall 80% or by $10 billion. Some 13,000 of the company’s roughly 91,000 employees have volunteered to take unpaid leave but CEO Ed Bastian told staff that more volunteers are needed.
United plans to cut 90% of international service scheduled for April and warned it may have to lay off thousands of workers if Congress doesn’t act fast enough. It said Saturday that it will reinstate some flights between several European cities, Sao Paulo, Brazil, Seoul, South Korea to the U.S. to help displaced passengers.
Without “sufficient government support by the end of March, our company will begin to take the necessary steps to reduce our payroll in line with the 60% schedule reduction we announced for April,” CEO Oscar Munoz, the airline’s president, Scott Kirby, who takes the helm next month, and several labor unions told employees in a memo. “May’s schedule is likely to be cut even further.”
Conditions for aid
Airline executives said they will not furlough employees or reduce its staff through Aug. 31 if Congress approves at least $29 billion in “worker payroll protection grants.”
The industry is also seeking at least $29 billion in loans and loan guarantees and committed to limits on executive compensation, a pause on share repurchase programs and dividends. Some lawmakers and President Donald Trump this week said they favor prohibiting airlines’ stock buybacks as a condition for aid.
Airline labor unions are also urging Congress to act quickly on an aid package that is not made up of the entire sum in loans.
A loans-only bailout “will saddle airlines with so much debt that it will lead to bankruptcy and workers (who are right now on the front lines of this virus) will be hurt again,” Sara Nelson, president of the Association of Flight Attendants, which represents some 50,000 cabin crew members, wrote to Senators on Saturday. “A real relief plan has to put workers first — always — but especially in the middle of a public healthcare crisis. Federal aid designed for payroll is the only way to prevent massive layoffs. Loans won’t cut it.”