How US Airlines Are Handling Covid-19 Layoffs
Following the approval of $25bn in congressional aid back in March, airline execs worked tirelessly with union representatives and their employees to maximise the number of staff they could keep on through the pandemic. A raft of policies, including voluntary redundancies, early retirements and reduced hours meant many thousands of airline staff could keep working despite the continuing crisis the industry faced.
Then on October 1 the conditions tied to congressional aid under the CARES Act elapsed and - with no hint of a further bailout in sight - many airlines were forced to embark on a programme of mass layoffs and involuntary furloughs. So far the the 30 biggest US carriers have laid off or furloughed 50,000 employees, though early estimates indicated it could have been double that.
Yet despite this universal calamity some airlines are guilty of handling the crisis far worse than others. Where some carriers furloughed tens of thousands of staff, a few have managed to see through the worst of the crisis without a single involuntary redundancy. To give an idea of this disparity, we’ve summarised how the four largest airlines handled layoffs during the coronavirus crisis.
It stands to reason that the world’s largest airline would have the greatest fallout when it came to pandemic redundancies, though the number of layoffs at American Airlines is still truly shocking.
In October AA told 19,000 of its 133,700 employees that they would be furloughed without pay. This was down from an early estimate of 26,000 or approximately 20% of American’s total workforce.
This is despite 12,500 employees agreeing to an early retirement or voluntary redundancy package, and 11,000 going on voluntary furlough. In the same month American announced that it had borrowed the largest amount any of the big US airlines: $45 billion in one year.
The one silver lining is that the airline doesn’t anticipate any more furloughs until 2021. And with another bailout package currently making its way through the Senate, there’s hope they’ll be able to keep that promise.
From the worst offender to the model student: Delta stands out among the big four airlines for not furloughing a single employee in 2020.
In September Delta CEO Ed Bastian confirmed that no flight attendants or ground workers would be furloughed following the expiration of the CARES Act in October. This followed careful negotiation with unions to allow 20% of Delta staff to take early retirement or voluntary leave packages. However Bastian warned that 1,941 pilots could still be furloughed if further negotiations did not take place.
Fortunately, Delta and representatives from the Air Line Pilots Association (ALPA) came to an agreement to cut pilots’ flying time by an average of two hours per pilot. This allowed the airline to announce on October 29 that no pilots would be furloughed until at least 2022 - despite monumental losses for the airline itself of $11bn in the third quarter.
Initial signs at Southwest seemed positive, with the airline granting six months leave to 28% of its staff. However, in November the airline was forced to issue the first ever furlough notices in its 50-year history, placing 42 material specialist workers on alert.
The notice came after the Teamsters Union - who represented the workers - refused to agree with management over pay concessions.
Now things have gone from bad to worse, with Southwest warning that as many as 6,800 workers could be furloughed by early 2021, including 1,221 pilots and 1,500 flight attendants. Again the news came after union bosses refused to accept temporary paycuts of 10% for one year.
The airline is currently shedding $11m a day - on top of existing losses of $2.2bn from the first nine months of 2020.
Finally, the picture at United looks little better than most, with the airline announcing on October 1 that it would be furloughing 13,000 of its employees. This includes 6,900 inflight service workers and 2,200 technical operations staff. Again these numbers were reduced after several thousand employees agreed to voluntary redundancies and early retirements.
United have been vocal in laying the blame for these cuts on Congress, after the airline’s executives made an eleventh hour plea to lawmakers to extend federal aid for the industry in September.
“In a continuing effort to give the federal government every opportunity to act, we have made clear to leadership in the Administration, Congress and among our union partners that we can and will reverse the furlough process if the CARES Act Payroll Support Program is extended in the next few days. We implore our elected leaders to reach a compromise, get a deal done now, and save jobs," a statement from United said.
Undeniably it has been a grim year for the airline industry as a whole and while some carriers have performed extraordinarily well to avoid layoffs, all airlines and unions have done their absolute utmost to minimise the impact on people’s livelihoods.
But as airline bosses themselves will attest to, without further federal aid the future of the industry will continue to look bleak. Mass layoffs will make it harder for airlines to rebound once the pandemic is over and will cost thousands of Americans their incomes in the meantime. Until congress agrees to a further bailout, the situation could get a lot worse before it gets better.