Is United Airlines President Scott Kirby Blackmailing The President?

United has gotten a lot of attention for taking government money to save jobs while at the same time planning publicly to furlough workers and to terminate non-union employees without severance. I’ve written that United’s approach to announcing plans for layoffs now is simultaneously,

  • cutthroat management
  • brutal honesty about what’s coming
  • positioning for another bailout

The airline is doing what it believes it needs to do to survive by sticking it to customers (refusing refunds for cancelled flights, redefining the world ‘cancelled’, and devaluing MileagePlus) and employees (pay cuts now, pre-committing to furloughs in October). That may be brutal realism, and airline President (soon-to-be-CEO) Scott Kirby is just more cutthroat than competitors.

But is there a kabuki element here as well – now that they have the bailout money, they’re positioning for the next one? In the Airlines Confidential podcast former Spirit Airlines CEO and current JetBlue board member Ben Baldanza wonders the same thing at 10m43.

Talking about layoffs happening immediately after the subsidies end is an interesting strategy. In some ways it’s probably what they would have to do if in fact demand doesn’t return by then and in that way probably they are being honest and they’re giving as much room for their employees to figure out what to do and figure out what this means for them and what their options are.

On the other hand it could be a little bit of a signal to the government to say you helped us through September but if you want people employed through the election you better re-up this thing.

The President won’t want significant job losses one month before the election. Democrats won’t want to hand the President a victory right before the election, but they’d have a hard time walking away from subsidizing union jobs.

I’m confident that United is taking the hard nosed approach they believe they need to take for their business, and that it may just be an extra added bonus that they’re jump starting the conversation early on a second round of aid if the government printing machines are still going brrrr – though they risk so much of a backlash that the aid will become even harder to get.

Update: It occurs to me, about five minutes after publishing, that the scenario I’ve described above is extortion but not blackmail.

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 »

More articles by Gary Leff »

Pingbacks

Comments

  1. AA has also informed their employees of layoffs at the end of the deadline as well. Maybe AIRLINES are extorting, but I don’t think UA is doing is solely if its happening.

  2. @ Gary — The next bailout should be effective January 20, 2021 and should be contingent on a new President.

  3. It’s neither blackmail nor extortion but simply fact. It is what everyone knows that will happen, it’s just that United is actually saying something about it.

  4. @joelfreak that is not correct, American hasn’t promised no layoffs but has said they’re trying really hard to manage downsizing the airline through voluntary leaves and early-outs.

  5. @gary and @jakefreak MANY of AA FA’s commented about a all-hands call on their YouTube blogs this week where they said they were told they may lose their job on Sept 1 (or whenever that date is). This is more than 1 AA FA, based in different bases…

  6. Extortion is what the President does to the States with things like terminating New York residents’ eligibility in Pre Check and Global Entry.

    Saying that you can’t keep 100% of the staff when your business is down 60-80% is just a statement of the obvious, one that it’s obviously not being grasped by the ever shrinking talent pool governing the U.S.

  7. This is what United was going to do, even before Cares money was approved by Congress. Everyone is pointing at Kirby, but this all leads me back to Munoz.

    Munoz was on the Continental’s board since 2002. His management style at CTX was very ambivalent, concentrated most on the balance sheet, with little known employee interaction. How he was chosen to replace Smisek is still a mystery novel to be written.

    Munoz’s initial opinion of Dr Dao, and UAL’s handling is probably the best indicator of his people skills. He is the hardliner at UAL, and agrees with the style of Scott Kirby. He hired him, so you have to believe he endorses his poor people skills. After Kirby, you have 2 hardliners, that came from Smisek, Greg Hart, Brett Hart.
    If Munoz really wanted to make UAL customer centric, these were the the two voted by many former UAL executives, as least likely to succeed.

    Want to know more, tune into the UAL virtual meeting on the 15th of MAY. It should be very entertaining for the investors of UAL to hear!

  8. Jake
    No, you’re government is breaking federal law, therefore you’re losing privileges. National security laws are being broken and national security measures were taken to shore up new yorks irresponsible behavior.

  9. Not sure how kirby is blackmailing anyone. It’s dire. So he should just keep everyone on? I think he is being honest, especially to his employees. These planes are EMPTY. Employees see the writing on the wall. UA was flying 500k passengers a day now its 22K. United has close to 26K flight attendants of which only 3000 are needed to staff the current flight load. After 9/11 the cuts were swift, thankfully the CARES act has given employees some time.

  10. In the upcoming age of new airline economics will bloggers, such as yourself, continue to rip apart the fabric of existence for the employees that serve their customers every day?

    Will you do this while simultaneously benefitting from the treatment that these same airlines give you for fear of written reprisal?

    This, my friend, is extortion or is that blackmail?

    You’re the vigilante with the keyboard.

    You tell me.

  11. It a known fact that the all AA FA absolutely NO lay offs are coming October 1. The company is trying very hard to get more FA to take VLOA. and have offered retirement packages. YES! There will be FA laid off October 1. Letters will most like be mailed out in September.

  12. Although he may not be blackmailing any one or UA language interpretation of IAM unions in these difficult times. But to myself this issue, with Airlines claiming they have right to reduce people that have been FT some for 40 years with real life issues disabled children etc, or other issues to PT, at will, is wrong not because of contract language interpretation, but the mere agreement with the Government to
    Receive 5 Billion dollars, nothing should happen to UA employees till after 09/30 per government’s agreement, so airlines can’t have it both ways take 5 Billion and reduce hours. Give the funds back if your going to cause strife with Unions and which will impact customer impact with moral, etc. many employees in different business models have been laid off and they benefit from the state unemployment and the $600 cares payment which combined is more than they made working. UA makes it so they cannot do
    This, UA management just wants the best of both worlds. Keep in mind officers like Kirby and Oscar won’t be filling unemployment claims any time shortly Kirby just in bonuses made over 15 Million last year, besides his base salary. It’s nice they claim the will not take their base salary’s the remainder of year. But they’ve made plenty to sustain themselves in last 5 years. No one talks about that. Take care folks, happy reading

Leave a Reply

Your email address will not be published. Required fields are marked *