The $900 billion relief package for households and businesses includes $15 billion for airlines to pay all their workers.
Photo: michael reynolds/Shutterstock
Airlines are preparing to call back tens of thousands of workers they let go in October now that Congress has approved government assistance to cover carriers’ payroll through the end of March. The question is how long employees will be able to keep their jobs.
The $900 billion relief package for households and businesses battered by the coronavirus pandemic includes $15 billion for airlines to pay all their workers. Carriers are hoping—for the second time—that the government assistance will serve as a bridge through a rocky period.
Many travel executives believe there is pent-up demand for travel that could be unleashed next summer. If they are right, airlines will need as many pilots, flight attendants, mechanics, and baggage handlers as they can get in order to keep up. Airlines furloughed over 32,000 workers in October when the government aid they received last spring ran out.
But a new strain of coronavirus in the United Kingdom has illustrated how quickly prospects for a recovery in travel could change. The strain has prompted a wave of travel restrictions in Europe and elsewhere, raising fresh questions about when borders will reopen and when people will be comfortable traveling again.
The funding bill, which President Trump is expected to sign, covers airline employees’ wages and benefits retroactively from Dec. 1 through the end of March, and bars airlines from furloughing or laying people off again during that period.
United Airlines Holdings Inc. UAL -2.58% said Monday that it plans to bring its workers back but cautioned that it may be only temporary.
“The truth is, we just don’t see anything in the data that shows a huge difference in bookings over the next few months,” Chief Executive Scott Kirby and President Brett Hart wrote in a message shared with employees and the media on Monday.
Airlines received $25 billion under the Cares Act last spring to cover workers’ pay and benefits. In exchange, they agreed not to lay off or furlough employees until Oct. 1. But travel didn’t rebound over the summer. Airlines warned that job cuts would be coming and pleaded for another round of aid.
When it didn’t arrive in time, they furloughed tens of thousands of workers, including 19,000 at American Airlines Group Inc. AAL -2.90% and over 13,000 at United.
“At least it will get me to March,’” said Alex Whitney, a United flight attendant who was furloughed.
Doug Parker, American Airlines’ chief executive, said Monday that the airline could cut checks to workers as soon as Thursday. In a letter to employees Monday, he said the airline is working out the details of how it will bring workers back.
Tracking down all the furloughed workers could be a daunting task. The employees have relinquished their corporate email addresses and mailed back company-provided phones and ID badges. Some may have moved. In many cases, workers will need training before they can return to their jobs.
Not all airlines cut staff once aid ran out in the fall. Delta Air Lines Inc. DAL -2.17% didn’t furlough any workers, though many have been working reduced hours. Delta said earlier this month that it planned to bring all its workers back to full schedules by Jan. 1, though it also sought more volunteers to take unpaid leaves of absence.
“We know the recovery continues to be choppy,” Chief Executive Ed Bastian wrote in a Dec. 9 message to employees.
Pilots at Delta and United had agreed to accept cuts in order to prevent furloughs. Provisions in those agreements will be paused so pilots’ pay will be restored through March, unions have said.
The legislation may halt contentious negotiations between Southwest Airlines Co. LUV -0.88% and several of its labor unions: the company had told workers that furloughs in 2021 would be unavoidable unless unions agreed to concessions or the government provided more aid.
A Southwest spokesman said the airline is “very encouraged” but needs to examine the final terms surrounding the payroll funding. He declined to say Tuesday whether the airline will call off its planned job cuts next year.
Airlines had asked for the Cares Act funding to be extended with no changes to the terms, and the new legislation closely tracks the previous agreement. Airlines must agree not to buy back shares or pay dividends, and to limit executive compensation. The Treasury previously required that airlines repay about 30% of the job support funding.
The package once again requires airlines to maintain service levels to ensure that rural areas don’t lose air service, which could mean that carriers have to restore flights that have been cut in recent months.
Write to Alison Sider at [email protected]
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This post first appeared on wsj.com
