Airlines are telling Congress they need another round of payroll subsidies so that they stay ready to return to flying once passengers are ready to fly and support the economy. They’re claiming that they aren’t going to bring flights back until demand is there, and they aren’t going to keep the employees on board and ready to grow the ariline because they have to cut costs.
Except that’s not what they’re doing or planning. Airlines will make the investments necessary to capture passenger demand once it’s there. And that’s what they’re telling employees, too.
Speaking to a group of pilots at the end of last week, a recording of which was reviewed by View From The Wing, American Airlines CEO Doug Parker laid out plans not to cut flights further during the winter this year and to grow the schedule for next year even in advance of passenger demand,
Even if demand stays where it is, you will see us flying a similar level as this for the next 6 months as we get into spring we’ll start ramping up the schedule 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.
One argument for government to provide subsidies to prevent furloughs is to keep people connected to their employer, so that the economy doesn’t take as long to sort out who is going to work where. But Parker tells employees that without subsidies there will be furloughs – but that he expects to bring everyone back from furlough quickly,
I fully expect that sometime in the spring we’ll start recalls. And hopefully the easier way to say this is to tell you that we’ve retired a number of our aircraft early.. but if we have all the airlines [sic] we currently own flying by next summer that’s an airline that’s going to be something like 10% smaller, let’s say, 10% – 15% smaller than the airline we flew in 2019. Well I told you we’ve had 12,500 individuals voluntarily leave the airline. That’s close to 10% of the total people in the company. Overly simplified math.
My point is this. If we can get this airline back to where we’re flying just the airplanes we own, we’re going to need all the people that are here today pretty much. There’s a possibility anyway that we need everyone back by sometime in 2021.
I am highly hopefully this is not one of those furloughs where people leave and we don’t see them again. Indeed if we have to get to that position our objective is going to be to stay in touch with everyone on furlough, let them know they’re part of this company and that we can’t wait to get them back…
I believe that’s where we end up, I got to be careful about that, I don’t want to make it sound like it’s a certainty..demand could stay very low, but I’ll tell ya that’s not what our plans are.
What’s more he explains that they’re keeping people on payroll that they do not need today, even without additional government subsidies, so that they can be ready to increase their flying. They need to do that with pilots, because it takes time to train and keep pilots current, but they don’t need to do that with other work groups,
One way to make that point is to note the difference in the number of pilots furloughed as a percentage of the total group versus the other groups, a number I don’t know off the top of my head… 1600 pilots compares to over 8100 flight attendants, and the reason..which is a much higher percentage of flight attendants than pilots for example, and the reason that is is because pilots take a long time, if we furlough pilots and then want them back next summer, that’s not a really smart thing to do because of how long it takes to get you back current and people back in the right seats etc.
The reason that number is smaller is because we do plan to be bigger. If we planned to stay this size for a long period of time, the number of pilots furloughed would look a lot like the same percentage at the number of flight attendants furloughed and the same as other groups, but that’s not the case because we really do intend to be hiring people back and bringing people back and if you have that view as we do it doesn’t make sense to do as many pilots.
Parker explains basics of the airline industry that you’re seeing repeated at other airlines, and that undermine the argument for government subsidies. They’re not in imminent risk of going out of business, and they’re making plans and investments to grow in advance of a return to normal. That means they’ll be ready to support the economy, whether more funds flow from the government or not.
American Airlines is more optimistic in its public statements than other airlines, though of course if an airline doesn’t expect to bring all of its employees back by April 1 then there’s absolutely no support for continuing to subsidize payrolls and have people paid not to work until that time – it would just kick the furlough can down the road (past the election), and delay the transition of talent to places where it can benefit the economy.