The Covid-19 pandemic has dragged on, and even though U.S. commercial airlines availed themselves of a $50 billion CARES Act bailout in the spring along with significant tax breaks, they’re once again demanding more money. Consumers haven’t been buying their tickets as often, or at as high prices as last year. But the airlines want to take your money anyway and this time you don’t even get a ticket or a seat assignment in exchange.
Over the summer and early fall their argument was that they’d furlough workers if they didn’t get a $25 billion, six month payroll bailout. About 40,000 workers were furloughed, which means they were demanding $625,000 per job ‘saved’ for six months (an annual run rate of $1.25 million per job). Most of the money – about 90% – would have gone to shareholder and creditor bottom lines.
The CEOs of 7 U.S. airlines are demanding more taxpayer money. According to a letter to congressional leaders signed by the heads of American Airlines, United, Delta, Southwest, Alaska Airlines, JetBlue and Hawaiian Airlines, they want a re-up of payroll subsidies ‘before the end of the year’ or else they might not be able to help distribute vaccines, that somehow they wouldn’t be prepared to take cargo shipping business if we don’t also give them billions first.
As the nation looks forward and takes on the logistical challenges of distributing a vaccine, it will be important to ensure there are sufficient certified employees and planes in service necessary for adequate capacity to complete the task…We respectfully ask that you come together and extend the successful PSP this year so that we can continue to support our critical aviation workforce and infrastructure…Your leadership is needed before the close of the 116th Congress so that this bipartisan and incredibly effective COVID-relief measure can continue to save American jobs and allow us to continue our significant role in the health of our U.S. economy.
- The claim that airlines are unprepared to sell cargo space for vaccines on their aircraft is disingenuous. American Airlines has told employees they’re ready to ship vaccine. United Airlines CEO Scott Kirby says they already “expect to be a leader in distributing vaccines around the world and look for more to come on our leadership role there.”
- Payroll subsidies aren’t how you’d ensure airlines are ready to ship vaccine, anyway. Why subsidize flight attendant salaries, or salaries at profitable frequent flyer programs, in order to prepare for cargo flights?
- If you are concerned about airline readiness, there’s a proven model. If there really was a risk airlines wouldn’t prepare to accept this shipping business, you’d simply take the same approach that Operation Warp Speed took with Pfizer as it developed its vaccine – pre-purchasing the product: guarantee airlines a certain amount of shipping business so that they can invest to be ready for it.
In any case, the aircraft operated by three of these airlines – Southwest, Alaska, and JetBlue – aren’t especially geared towards shipping cargo anyway.
Now, airlines are also still offering a nod to the need to support workers, though why you’d have a government program that puts paying wealthy pilots not to fly ahead of laid off restaurant workers is never really explained. Why not just pay airlines and pilots to continue to remain current with simulator training and takeoffs and landings?
In any case, while Southwest Airlines is looking at potential furloughs of workers who don’t accept a 10% pay cut, that’s largely the additional employee risk that’s on the table. Why would we even be talking about more than a bailout of 10% of Southwest’s unionized payroll?
American Airlines is telling its own employees they expect to bring people from furlough even without subsidies.
- American already downsized their workforce to meet current schedule needs. Airline demand doesn’t appear to be falling further, in fact it’s slightly higher than it was when furloughs were instituted at the start of October.
- The airline expects to “ramp[..] up the schedule [in spring] even if demand is where it is because it will be more seasonal, we’ll move into a summer period and we’ll need more flying.” And that, according to Parker, is why they expect to be recalling employees from furlough even without a broader recovery in air travel demand (“I fully expect that sometime in the spring we’ll start recalls”).
J.P. Morgan Chase told investors last month to expect another payroll bailout, most of which would be money straight into the pockets of airline equity. And they told investors that once airlines got the second bailout, to expect them to ask for a third.
The Congress needs to let the weak airlines fail and the strong survive. The military, cargo carriers, etc. are all capable of delivering the needed vaccine where needed. This is just a poor attempt at extortion and the airline CEO’s should be told that the US does not negotiate with terrorist. I agree with you Gary that paying F/A’s has nothing to do with delivering cargo. Instead of paying F/A’s to do nothing they should consider helping all of the wait staff at restaurants around the country that actually work and having a tough time making ends meet because of the capacity restrictions.
What scares the hell out of me is that the incoming administration will look to make a splash and pour money into the airlines as a way show they’re doing something having lived in DC for half my life I have seen this picture show before. I agree with the poster above me. It’s blackmail pure and simple. Frankly we as taxpayers have already paid from the first stimulus.!
THIS IS NOT MET to be political but I fear the incoming admin will be slanted to more and more social spending in the name of coming out of this mess. Like water the economy will seek it’s own level always has always will.
ground transport would take less time that legislation and arguments
Good thing there’s UPS and Federal Express.
I agree with OneXMarine above. Fed Ex, UPS, USPS, Amazon, etc. have been delivering packages overnight (sometimes within hours) for years. I trust these delivery companies more than the airlines.
US Airlines: “Pay no attention to the cargo airlines behind the curtain.”
@ Gary — What Christian says. These airline CEO are disgusting.
I am waiting for American Airlines to threaten to beat up one passenger per flight unless they get a bailout. Maybe United will offer an enhancement….one passenger stabbed, not beaten.
Straight up shakedown. Give us money or people die! Despicable.
I say lets quit pouring money int
o the military, wasting trillions in wars to line Dick Cheney and Bushs pockets while innocent people get killedfor profit, you people are worried about 25 Billion thats Chump change, Don’t fly! You can drive 4 days to get to coast to coast and pay 500.00$ for hotels,
Airlines SHOULD NOT be giving a penis. Shame on them, they already let go thousand of their employees.
This is a blackmail written all over it.
@Zach must be one of the airline hacks on here that wants to drag politics into everything. He should remember that the airlines make millions, if not billions, off of war by transporting troops to and from the battlefield. I was taken in and out of Vietnam by American Airlines. When a flying waitress can make over $100K a year working 100 hours a month that is an absurd amount of money. And it’s an insult to the waitress profession to call them a flying waitress because a waitress work 100 times harder than these over paid cry babies.
@Zach – You realize that Bush & Cheney have been 0ut of office for over a decade, right?
@BrianL – Of course @Zach doesn’t or that Obama, who is a democrat kept the war going for 8 years. Don’t try and confuse airline people with the facts, their minds are already made up!
A smart foreign carrier would suggest they can fly it for free if Congress gives them increased access to the US market
@cam – There are solutions to every problem without handing out billions of dollars to the airlines.
Don’t worry about the airlines .
Our friends in the military can do the job better than they can anyway.
No airliner can travel at Mach 2and not have to worry about schedules.
Not that I’ve ever heard of.
Screw these airlines. Honestly. I am sick and tired of these repeated bail outs (same with banks.)
The government should just give the contracts to UPS and FedEx.
Your article was horrible. I am one of the furloughed Flight Attendants that has been flying for 13 years. You seem to think that my job or that of my colleagues in aviation does not matter at all. We MUST retain certifications from the FAA in order to work and an airline cannot just bring everyone back at the snap of a finger. If we do not get aid, it will be a much more difficult and longer recovery than it would be fir a restaurant or hotel or casino. Borders are closed and our planes are parked. Flights are operating st a minimum and fares are rock bottom. Im not sure where you are getting your information that we are expected to be recalled in the spring regardless of the pandemic situation, but I assure you that WE who are ACTUALLY affected have received no such communication. Thousands of us who worked through the scariest part of the pandemic when nobody had any ideas about how it was spread or treated watched our friends, colleagues and loved ones get ill and yet we still as CRITICAL INFRASTRUCTURE WORKERS went to work to keep this country moving. Those of us who are furloughed no longer have company health insurance and I am personslly paying over $600 a month for COBRA. The Payroll Support Program is NOT a bailout. It us a workers first package that keeps employees tied to their jobs and health insurance. Its similar to what responsible governments in Europe and Canada have done for their workers. You CANNOT think that every other industry deserves help except the airlines. SHAME ON YOU for even posting this crap article. SHAME SHAME SHAME!!!
Although I am a shareholder of 3 of the 7 named airlines, my response to all of them is this:
NO. NYET. NO MAS. NFW. and finally, just a simple HELL NO!!!!
@Christina M Maximova – “You seem to think that my job or that of my colleagues in aviation does not matter at all.” Not at all! It clearly matters to you, why would I doubt that? I imagine it matters a great deal to your family, and to the customers you touch with excellent service.
@Christina M Maximova – No one says your job does not matters, everyone is saying that we, the taxpayers, are tired of bailing out the airlines because they can’t run a business. We are approaching 100,000 small businesses that have closed permanently. These are small mom and pop companies that people have invested their entire life savings into and in some cases their entire lives. The airlines want $25B for 6 months of payroll protection. I don’t have the exact figures in front of me but it comes out to about $1.2M per laid off employee on an annual basis. That makes no sense at all, other than they want to line their pockets. When the airlines got the bail out money in 2008/2009 recession they spent it on stock buy backs. The airline personnel have not helped themselves with poor service and nasty attitudes. American being the worst. The American F/A’s like Jetting Julia on YouTube who post videos while traveling on her “flight benefits” that are paid for by the taxpayer. Why are airlines flying people for free when every pound costs money in the terms of fuel, etc. The airlines and airline personnel are their own worst enemies. Suck it up buttercup, there are millions of people in the same shape or worse than you.
For years now we have been bombarded with Senate and House committees dragging thousands of people before them and then literally undressing them and/or berating them over little or nothing. In the case, it is a brazen threat that is an affront to all Americans. Everyone of these all of them should be immediately required to appear before endless of these forums, lambasted for a conspiracy to defraud the public during a major health crisis and not let go until they all crawl back in the their cooperate manholes having not only withdrawn the threat but offering the transport for nothing. This is the type of thing the RICO statues can be applied to. The American taxpayer more that anted up more than enough in the and, hopefully, last bail out!
The airlines will be fairly compensated for any services they provide in transporting vaccines or other medical supplies. Subsidizing them beyond that makes no sense.
Well said @IP, very well said! If I were on the board of directors I would be calling for them to be removed from their position.
Lol, $600 a month for COBRA. Wife and I are paying $2,100 a month and still can’t go to a doctor because we can’t afford the deductible. And this is for a job that barely pays $50,000 a year. I’ll take your flight attendant job if you don’t want it.
I would just like to point out that while there are a number of pilots making multiple six figures, there are even more that are not. Becoming a pilot is very expensive, and when you finally get a real job, you earn next to nothing, and work your ass off. For the first 15 years of my marriage to an airline pilot, I earned more than my husband, who has a degree in aviation. I have a high school education. Wealthy? Please!
What a BS threat!!! I’m sure Fed Ex and UPS will step up and gladly distribute the vaccine.
At this point I hope a few airlines go out of business (and I’m lifetime elite on AA and DL)! The begging and threats are getting old. Let supply/demand play out and no more subsidies
The federal government and the pharma companies have already contracted FedEx and UPS to transport the vaccines. The passenger airlines are not even involved. Empty threats….
@Christina M Maximova Just curious. How many FA’s are required for a shipment of vaccine in the cargo hold?
Gary Leff, you should be ashamed of yourself for writing this garbage article. Get your facts straight before you publish. Everything you wrote is complete and utter fabrication. Untrustworthy blogger. At least now we know what a phony you are. You lost your credibility… Thank you for that.
@. – the worst kind of comment is one that says ‘your facts are wrong’ but refuses to say which facts (“all of them!”), why they’re wrong, or offer any ‘alternative’ facts.
Everything I wrote here is accurate. And as for the main message, that airlines threatened Congress this week that they won’t be able to ship vaccines without subsidies is literally in the quoted letter from 7 airline CEOs, and was the main message of that letter.
So what facts exactly are wrong? And what makes this article ‘garbage’? Thank you in advance.
@Gary – all they said is that to be the most ready for distribution that it would be good to have everyone on staff and not have to worry about re-certification or the issues with having team members away. Nobody said that they ‘won’t’ – nor that they would be ‘unable to do so’ as your title suggests. You can debate the merits of an airline bailout (and the value of tying a vaccine together with this) but come on man, no one is ‘blackmailing’ anyone.
Pre-paying is an option, and a good one – but you can’t honestly expect a business group to make that nuanced of an argument, particularly a heavily unionized one that is being pushed by their unions to ask for more money. Otherwise you’re asking a corporate leader to tell 75% of their workforce to pound sand because of a political/economic ideology – that’s the kind of argument an economist makes, not someone running an organization. Also, you call out that the industry is doing better than it was a month ago – that’s just not true given the current spike in cases – the domestic business will have much less demand than originally anticipated for the holiday season. Airlines will see cash burn spike again. Lastly, you’re right, by next summer 50%+ of those laid off will likely be back in service – but vaccine distribution will mostly happen in the first six months of the year. That’s the argument that they’re making – again, you can disagree.