Union: Time Is Running Out To Pass The Most Expensive Unemployment Deal In History

Airlines took $25 billion in payroll subsidies from the federal government. The idea was to keep workers attached to their jobs until the pandemic was over and passenger demand returned in the fall.

Taking the money meant not laying anyone off until October 1. Airlines cheated though: the law said they couldn’t reduce rates of pay, and they couldn’t furlough workers. So they reduced hours and required employees to take unpaid leave. That way they could pocket the difference.

The carriers will tell you the government money didn’t pay their entire payroll, and that is true. But airlines were never going to lay off 100% of their employees, either. American Airlines says that about three-fourths of last year’s payroll was covered by government funds.

  • Airlines have substantially reduced their payrolls through leaves, early outs, and ‘voluntary’ layoffs in lieu of October 1 termination.

  • Southwest says they will not even furlough anyone this year without additional government money. So the $4.5 billion they’d get from a ‘clean extension’ of payroll support is for what, exactly?

  • Layoffs at other airlines could be 30% or more minus the voluntary leaves and retirements they get

So why are airlines calling for a ‘clean extension’ of payroll support? It’s the most expensive unemployment program there is. While Congress and the President wrangle over how much to cover in additional unemployment for laid off workers, airline workers would get 100% of salary not to work and the government would effectively be paying airlines a 100% premium to do it. Airlines would be receiving far more in payroll subsidies than the cost of the people they’d otherwise lay off.

Here’s the American Airlines flight attendants union calling on leaders to come up with cash quickly. Notably they address the President, the Treasury Secretary, and Speaker Pelosi – asserting (as others have) that Senate Majority Leader McConnell has been reduced to irrelevance:

Time is running out. Hundreds of thousands of US aviation jobs may soon be lost. Flight Attendants, pilots, mechanics, agents- all US aviation workers are standing at the edge of a financial cliff. If our leaders in Washington act now, we can save the aviation industry from irreversible damage and stand ready to re-ignite economic regrowth throughout our communities.

We have reached a critical point. Without new stimulus relief legislation, airlines will have to go through with their plans to furlough thousands of workers.

Poorly written as this is – they cannot decide whether it’s tens of thousands or hundreds of thousands of jobs at risk – this gets our priorities exactly backwards, paying a captain $200,000 to stay home. But furloughs would come a month before the Presidential election (getting Republicans on board) and they’re mostly union jobs (getting Democrats on board).

At the end of the next six months though passenger demand still will not have recovered, and airline employees will be… furloughed. IATA says it will be four years before we see demand equal to 2019. American Airlines CEO Doug Parker says even if Covid were a distant memory next summer that his airline would be 10% – 20% smaller.

Spending $25 billion for airline employees who aren’t needed not to work, on the fiction that they somehow still have jobs, pushing back the transition of employees to other industries six months is simply six more months it takes for the economy to become productive again. That hurts everyone.

Better to focus on people throughout the country whose jobs are lost and are legitimately scraping by, rather than pilots who worked half time with a side business to begin with or flight attendants who will have to find themselves a new job in April anyway.

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 »

Comments

  1. Totally agree! Time for the airline handouts to stop. Truth is, that with dramatically less employees, there will also be no need to for the endless levels of management either!

  2. If you cant trust the airlines to keep their word with lifetime benefits how can you trust their word if they
    keep getting bailouts? Sorry, but the airlines have to right size themselves through these times. As far as the employees goes I do feel bad but every other sector tied to travel has already slashed staff to some extent i.e. cruise lines, some hotels, car rental agencies some which have slashed their fleet and staffing to a bare bones operation. Hertz is already bankrupt and Avis seems to be right behind them if this keeps up. Sorry airlines, but you have to right size as well…

  3. As someone who works in the airline industry, your argument is overly simplistic and shows much ignorance on the realities of the situation.

  4. You know where I stand on this, Gary. As sad as it is, it’s time for us to cut our losses and call it a day. When the airlines rebuild and demand returns, we can be recalled from furloughs.

  5. They will get the money because airline unions are generally bad for both management AND labor, but when you need inefficient political pork, they are great for getting votes from both sides of the political aisle.

  6. Although Geoff May be recognized as an “expert in frequent flyer miles, points and frequent business travel “ he’s far from qualified to comment on the value of highly trained and dedicated life long professionals such as pilots and flight attendants. His comparison of their value to unspecified ”people throughout the country who have lost their jobs” shows a true ignorance of the required education and experience these positions require and as well, the cost and time to requalify them when they return from furlough. Furthermore, to state as fact that all pilots “ work half time and have side businesses” is shameful in it’s simple conjecture and obvious attempt to degrade our group simply to support his argument.

  7. We shouldn’t call it a handout. It’s “stimulus”. It stimulates them to o…do nothing and still get paid??

  8. @Mark, AA B-777 Captain – delaying transition of people out of unproductive stay at home jobs (where many will be furloughed in April anyway) into new industries and roles is bad for the economy. Pitching this as somehow important to economic activity is pure sophistry.

  9. @Mike – it’s always revealing when someone criticizes an argument for ‘ignorance’ without offering any explanation of what they even think is wrong about an argument.

  10. As an essential (union) worker who has worked through the entire pandemic (less this week’s staycation and one in May) I must say its time to adjust to the new reality. I’m exposed to many people a day who don’t know how to wear a mask properly, should they decide to wear one at all. I’ve received two hazard pay bonuses, equaling about two weeks pay earlier this year. April and May. I have not received an extra $600 a week, nor pay for sitting at home. I do support a supplemental unemployment benefit, and an extended unemployment eligibility period, but the time to pay employees to do nothing is over.

  11. While it pains me to say it, another bailout does no good for the economy or the country in the long run.

Leave a Reply

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