MIAMI – US airlines will obtain an additional US$15bn under the new bipartite coronaviral relief package to be finalized by the end of the day.
According to cnbc.com, sources in Capitol Hill have said the aid is a go. Under the latest help round, airlines should call back more than 32,000 employees who were furloughed on October 1.
After expiring the original aid conditions, American Airlines (AA) and United Airlines (UA) began to furlough about 32,000 staff in October and tens of thousands more jobs were shed from those carriers and other US airlines after employees were encouraged to accept buyouts and early withdrawals. However, the aid/furloughs issue should be analyzed on an airline-by-airline basis.
Both AA and UA are burning daily between US$25m and US$30m, but each has liquidity of more than US$15bn. UA has said it will recall its laid-off staff, but it also believes the market situations will not change, so it plans to lay them off once the relief deadline expires in March.
Regarding Delta Air Lines (DL), George Ferguson, a Bloomberg Intelligence analyst, expects the carrier to get US$3.3bn from the relief package, which, he notes, “would increase the staying power of the carrier. The grants would add US$16.5bn in liquidity to our year-end expectation.” While DL did not lay off any workers, it did decrease its workforce through buyouts and voluntary unpaid leaves.
On its part, Southwest Airlines (WN) notified nearly 7,000 workers earlier this month that they could lose their jobs if labor unions did not accept certain concessions to help the airline maintain its business during the current health crisis. The airline estimated that “overstaffing costs” would amount to about US$1bn in 2021, and asked unions for pay cuts of 10% in exchange for no furloughs through next year.
To Extend Furloughs or to Call back Workers
In another case, after reaching an agreement with the Air Line Pilots Association, Mesa Airlines (YV) announced on October 2 that it would avoid employee furloughs in 2020. The airline’s approximate 3,400 employees were said then to be safe from any layoffs.
However, in March of this year, YV decided to suspend all new hire training, allowing all new hires to return home as per an internal memo. This means that some YV employees were, in effect, furloughed, according to a YV employee who contacted Airways. This would contradict Mesa Air Group Chairman and CEO Jonathan Ornstein’s “no furloughs in 2020” statement, perhaps referring only to YV Pilots.
Mesa Airlines Senior Vice President, Flight Operations, Brad Holt address YV staff in an email in May, stating, “As you know, the entire industry has been significantly disrupted by the pandemic, and Mesa Airlines is no exception. Because of COVID-19 and the effect it has already had on the company, unfortunately, we must extend your furlough until further notice.”
If US airlines do get federal funding once more, they will have enough cash to meet their payroll commitments until March 2021. As per the CNBC report, the Transportation Safety Administration reported that today, 1.07 million travelers were screened at US airports. That is up 25% from last week but less than half of its almost 2,5 million screenings a year ago.
Airlines, unlike other businesses such as restaurants, have powerful lobbyists and make campaign donations. Lawmakers also spend a lot of time flying to/from their home states, so they are heavily invested in the survival of the airlines and are, therefore, susceptible to the appeals of the aviation sector for financial support.
Hopefully, with this second aid package, all airline staff will be called back to work, specially during the holidays or at least in time to usher in the new year.
American Airlines Boeing 787-8 at MIA. Photo: © Brent Foster – @5starflight