American Airlines CEO Scoffs At Fringe Republicans Who Don’t Support Another Airline Bailout

American Airlines CEO spoke to a group of pilots a question and answer session posted to the company’s intranet on Monday. In his introductory remarks he talked about the politics of the next coronavirus stimulus bill, which includes more payroll support for U.S. airlines.

The first CARES Act provided $25 billion to airlines on the promise that they wouldn’t furlough workers or stop serving the destinations they fly to (without special permission from the Department of Transportation). American got more than 70% of its 2019 payroll covered, even though they reduced payroll substantially through early retirements, leaves, and slimming down management ranks by 30%.

Southwest and Delta so far have avoided furloughs completely. Really only American and United furloughed any significant number of workers when the CARES Act payroll support restrictions ended October 1. Parker has been the most outspoken airline CEO looking for a second round of funding, with United CEO Scott Kirby appearing publicly as well. (Delta’s CEO has mostly kept quiet but of course will take another $5.4 billion to protect zero jobs, since he hasn’t furloughed anyone.)

Another $25 billion to restore 35,000 jobs is over $700,000 per worker just for six months, which gives away the plot that this is mostly money for airline shareholders. It has to go to payroll, but it would go to cover payroll expenses the airline would have anyway.

And according to Doug Parker it’s only ‘a handful’ of conservative Republicans whom he scoffs at that oppose another bailout,

We have made huge progress in terms of the argument. I mean literally almost no elected official argues that it shouldn’t be done. There are a handful of really fiscal conservative Republicans who just think you know, who just viscerally disagree with the government doing anything that looks like you might be funding a business. I’m talking about a handful. We would get 80 votes in the Senate, we would get 400, 375 votes in the House for a standalone bill to go extend PSP.

Parker is right. At least publicly huge numbers of Members of Congress have said they support this. The same people are calling Congress every day, over and over. And those are the only people Congress hears from. That’s part of the reason why most Members fall for it.

Pat Toomey from Pennsylvania has raised objections. He doesn’t have to worry about running for Senate re-election, since he’s retiring. Mike Lee from Utah has raised objections, but Delta (with its Salt Lake hub) hasn’t made this the same priority that United and American have. Parker is right, only a handful of Republicans have said anything about it – and only a handful.

At the same time the bailout is caught up in the politics of a larger bill. At first Speaker Pelosi seemed to support doing an airline bailout as a standalone bill. But then Treasury Secretary Mnuchin seemed to go for it, and she refused.

Now Senate Republicans are running away from Trump, assuming he’ll lose re-election. If Joe Biden becomes President they’ll need to shift to the role of fiscal conservatives again, which will be difficult to do if they’ve just passed another $2 trillion spending bill. So even if Pelosi and Mnuchin can get a deal done, they have to get it through Republicans in the Senate who prefer a smaller bill, though Trump has threatened to do a deal that gets passed by Senate Democrats and whatever Republican votes he can muster.

Parker is correct that whether his airline gets another bailout depends not on the merits of that bailout (though he’s wrong on the merits) but on the politics of a larger bill right before a Presidential election.

Airline bailouts may be a headline bullet point in the legislation, but it’s just another item alongside $250 million to discourage recidivism by ex-prisoners; $100 million for victims of child abuse programs; $12 billion in wifi hotspots for schools and libraries; $8.5 billion for substance abuse programs; $350 million for AmeriCorps; $175 million for PBS; $100 million to the Veterans Administration for supply chain management; $1.5 million for the Saint Lawrence Seaway Development Corporation – name just a few.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. How many times has AA been bailed out of bankruptcy by the feds? 3 times? More?

    Does anyone actually think that this fiscally mismanaged airline will still be in business in 3 or 4 years?

  2. Nun – Parker’s clearly saying it’s these unreasonable and weird outliers who are opposed to airline bailouts. Gary characterizes that as crazy. That’s fair, you may disagree, but in writing that Gary is slandering Parker, you are slandering Gary. So you’d better hope he doesn’t go after you for it!

  3. You know what, I don’t like the quick take of ‘Crazy’ so I’ve updated the title. He’s clearly scoffing at what he views as a small fringe of Republicans here.

  4. @ Gary — Wow, I’ve never been called a crazy Republican before (except by a certain Communist relative). I hope that Congress has the backbone to stop handing out free money to for-profit corporations.

  5. I don’t get it.. Why can’t US airlines sell their own assets to raise money? Why do taxpayers have to keep bailing them out? It’s not like the airlines are thinking about us when they devalue their FFPs or charge us a fee to cancel a booking (pre-COVID).

  6. Why would we borrow money from China to give to Doug Parker?
    I don’t think the stated positions are ‘fringe’ at all.

    If I ran my life like Doug Parker ran AA, with the buybacks, excessive leverage/debt, etc, I’d be living in a tent under a bridge by now.

    I’d like to get sh** for free, why I can’t I get handouts????? I don’t understand.

    Whole thing disgusts me.

  7. Parker accepts billions of tax dollars and furloughs 800+ AA aircraft maintenance workers. Parker than uses these US tax dollars for aircraft maintenance to be done overseas by foreign workers. Also 8,000 AA flight attendants were furloughed while 1,000+ foreign (South American) Flight attendants still employed. Do the folks in Washington know this?

  8. American Airlines has only filed bankruptcy once and does more maintenance in the United States of America than any other airline. All large corporations have there problems most don’t know how much the we depend on airline’s for transporting goods we use on a daily basis .

  9. Sorry, American bought back how much stock to pimp executive bonuses? (Financial engineering never works, but they keep trying).
    Too tired to look it up but I will bet they even levered to do it.
    Sooooo… let them sell stock, esp. the stock they bought back, before a penny of govt. (our) money is advanced. If it has to be sold at a discount, or is dilutive, tough. That’s why shares are risk capital.

  10. As a current, non furloughed FA I am greatly opposed to a bailout for AA. AA is fiscally irresponsible and they’ll need another bailout in another six months.

  11. As someone who is (a) not a crazy Republican, (b) who is strongly against the re-election of the conman-in-chief psychopath Trump, and (c) who has lifetime elite status with one or more airline that may turn out to be on the financial brink, I am very much opposed to yet another corporate bailout of the US airlines.

    It’s better to use the airline-sought bailout funds to directly assist the unemployed victims of Trump’s coronavirus plague on America than it is to to bailout the airlines and the airlines’ senior management figures and shareholders.

  12. The boardingarea.com home page still has this blog article titled as: “American Airlines CEO: Only Crazy Republicans Don’t Support Another Airline Bailout”.

    Crazy Republicans are today the core of the Republican Party. Nowadays, the Republican Party is: mainly a base for the personality cult of Trump, crazy conspiracy theories, and unhinged anger and fear about women and minorities getting ahead in America. And nowadays the Republicans on the fringe of the party are Republicans like Mitt Romney and those who have stood with Mitt Romney and the late John McCain against the sociopath-in-chief Trump. This all just goes to show a previous fringe of crazies can take over and become the core base of a party while the previous core of a party can be made into its marginalized fringe.

    Let’s see if/when former President George W Bush comes out publicly as being a Biden supporter too. He’s certainly no fan of Trump.

  13. As an employee of this half asset company Doug Parker is an ass. We “furloughed” 19000 working people, but we’re hiring managers and supervisors left and right. They spent 10 million on new deicers for one station with five more on order for approximately 2 million because the cunt that runs the station wants them. But I can’t afford to feed my family. Tell the government to run not walk away from helping Doug Parker. When I had a business ba k in the day and lost it miserably to the depression back in 2008 (that’s what we who lost everything call it) no one helped us. Sadly it won’t effect Parker or his henchmen as the richer gets richer regardless of the state of this half ass run airline

  14. Good points! Some pyscho fringe Trump commenters. I’m almost exclusive AA flyer 22 trips during pandemic. “Shares are risk capital.” Yep! No bailout, unless they sell assets- planes, frequent flyer obligations, equity.
    Wonder what the townhall viewership controversy would look like if Google not posting links to Trump site(s) were factored in.

  15. I’d like those crazy Republicans to tell AA they’d get their bailout AFTER cleaning house at the top — with no golden parachutes.

  16. why don’t you give us a list of the handful — “There are a handful of really fiscal conservative Republicans who just think you know, who just viscerally disagree with the government doing anything that looks like you might be funding a business.” You seem to just another liberal who throws around accusations without the facts. But, if Joe Biden is elected etc.

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