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.