U.S. airlines have begun the complicated process of calling back 32,000 workers they furloughed this fall, a condition struggling carriers need to comply with to receive $15 billion in additional federal payroll support.
The aid, included in the $900 billion coronavirus relief package Congress passed Monday night, also requires airlines to agree to keep employees on the payroll through the end of March and restore certain routes. The process is underway though President Donald Trump hasn’t yet signed the coronavirus relief bill. In a surprise request late Tuesday, he asked lawmakers to increase the amount of direct payments to families and individuals.
Bringing back more than 32,000 furloughed workers, including flight attendants, pilots and mechanics, requires restoration of security clearances and ensuring that returning workers are up to date on federally mandated training. Airlines will also have to untangle some furlough mitigation programs, such as no guaranteed pay, that were offered in exchange for maintaining medical benefits. The bill calls for airlines to provide backpay starting Dec. 1, prohibits dividend payments and caps compensation.
The aviation job cuts, mostly at American and United Airlines, began this fall after the terms of the last package, $25 billion in grants and loans, ran out Sept. 30. Delta and Southwest Airlines’ employees escaped furloughs this year after tens of thousands of workers took buyouts, early retirement packages and temporary leave. Southwest earlier this month, however, warned close to 7,000 employees that they could be furloughed in March or April unless unions agree to pay cuts and other concessions, and Delta asked for more volunteers to take unpaid time off to help further lower costs. The aid will override at least briefly an agreement with the airline’s pilots for pay cuts in exchange for avoiding furloughs.
Labor unions have been urging lawmakers for additional aid since June and were later joined by airline executives as a meaningful rebound in travel demand didn’t materialize. Congress and the White House failed to reach a deal by the deadline and furloughs started Oct. 1, bringing U.S. airline employment to the lowest levels since 1986.
“We have taken steps to expedite payments to all furloughed team members,” American Airlines CEO Doug Parker and President Robert Isom said in staff memo on Tuesday, adding that funds should show up in their accounts on Thursday. American furloughed 19,000 employees, including nearly 8,000 flight attendants and more than 1,200 pilots. More than 900 other pilots are maintaining their medical benefits but don’t receive pay unless they can pick up trips.
Airlines are usually hesitant to furlough pilots because retraining them is costly. Without flying, they could lose currency on their aircraft and the clock was ticking.
“Luckily, the concrete hadn’t set yet,” said Dennis Tajer, a Boeing 737 captain and spokesman for the Allied Pilots Association, which represents American’s 15,000 pilots.
Employees will be brought back on the job in phases.
“We expect to continue to return employees to work in April and throughout 2021,” said a note to employees from Kimball Stone, American’s senior vice president of flight operations.
‘Temporary’ employment
The additional aid doesn’t mean airlines, or their workers, are on solid footing. A recovery in travel isn’t expected until the vaccine is widely available, so employees will likely only be called back “temporarily,” United CEO Scott Kirby and President Brett Hart warned in a note to workers before the stimulus bill passed.
“This is certainly good news for our economy, our industry, and our airline — but it’s especially good news for those who have been without a paycheck, and we can’t wait to welcome them back,” the note said.
But the United executives cautioned that they don’t expect a rebound in travel by the second quarter.
“The truth is, we just don’t see anything in the data that shows a huge difference in bookings over the next few months,” they wrote. “That is why we expect the recall will be temporary.”
Sara Nelson, president of the Association of Professional Flight Attendants-CWA, which represents 50,000 cabin crew members and was central to rallying workers and airlines for additional aid, called the United executives’ comments “inappropriate.”
“Let’s be clear: the law doesn’t say ‘temporary’ hires. It says you have to rehire everyone who is a permanent employee,” Nelson said in an interview with CNBC’s “The News with Shepherd Smith” on Monday night.
U.S. carriers are losing more than $180 million a day in December, and their pretax losses have exceeded $36 billion through September, according to trade group Airlines for America.
Successful trials of coronavirus vaccines sparked a rally in airline stocks on hopes that the public would want to start traveling again soon. In the current quarter, American shares are up 29%, United’s have risen 27%, Delta’s by 32% and Southwest’s by 25%. Airlines even cited their role in transporting the vaccine in their pitch to lawmakers for additional aid.
Despite initial elation over the Pfizer-BioNTech and Moderna vaccines, gains have faded as coronavirus cases spiked.
Airlines have seen a slowdown in bookings and weaker-than-expected revenue to end the year. A highly contagious strain detected in Britain has sparked a wave of new travel restrictions from more than two-dozen countries. Delta, Virgin Atlantic and British Airways — at New York Gov. Andrew Cuomo’s request on Monday — said they would start requiring negative Covid tests for passengers to board flights to Kennedy Airport.
Source: Business - cnbc.com
