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.