As payroll support nears an end, airline unions seek renewal

A surge in COVID-19 cases could delay airline industry’s comeback and lead to layoffs just before the election

People wearing masks watch airplanes at Gravelly Point Park in March as they fly into Ronald Reagan Washington National Airport. (Caroline Brehman/CQ Roll Call file photo)
People wearing masks watch airplanes at Gravelly Point Park in March as they fly into Ronald Reagan Washington National Airport. (Caroline Brehman/CQ Roll Call file photo)
Posted July 10, 2020 at 7:00am

United Airlines’ announcement that it could furlough nearly 40 percent of its employees after a spending bill aimed at protecting airline workers expires in September has spurred labor unions to call for another round of aid for the industry.

The conversation occurs at a particularly sensitive moment.

On one hand, Congress approved $50 billion for passenger airlines in March alone as the number of people flying in the U.S. fell by 95 percent from April 2019 to April 2020, according to the Transportation Security Administration. 

On the other, a surge of airline layoffs and furloughs would occur just before November elections, meaning voters would go to the polls with an industry-wide economic disaster on their mind. 

“There will be hundreds of thousands of aviation workers who go onto unemployment in October if we don’t extend this program,” said Sara Nelson, president of the Association of Flight Attendants-CWA, which represents nearly 50,000 flight attendants at 20 airlines. “And that will be included in the last jobs report before this election.”

Treasury Secretary Steven Mnuchin, interviewed Thursday on CNBC, stopped short of making a specific request to Congress but reiterated the need to keep the industry from going under, saying, “they’re going to need more help.”

[Transport workers still seek enforceable COVID-19 rules]

The $2 trillion COVID-19 spending bill approved in March included $25 billion in grants to passenger airlines and $25 billion in loans to passenger airlines. The grants, known as payroll support, bar airlines from cutting pay or benefits or enacting involuntary furloughs through Sept. 30. 

But with all bets off after Sept 30, two labor unions — the Air Line Pilots Association and the Association of Flight Attendants-CWA — are calling for Congress to consider a second round of airline aid.

On Wednesday, United Airlines sent a memo to employees warning that unless more people took buyouts, reduced their hours or took early retirement, furloughs would likely affect about 15,100 flight attendants, 11,000 customer service and gate agents, 5,500 maintenance employees and 2,250 pilots. 

‘Depressed’ environment

“The reality is that United simply cannot continue at our current payroll level past Oct. 1 in an environment where travel demand is so depressed,” the airline, which collected $5 billion in payroll support through that March spending bill, told employees.

Other airlines are also cautioning that the recovery has yet to materialize. In a memo to Delta employees this week, CEO Ed Bastian said while the airline has increased its liquidity and reduced its daily cash burn, current conditions are “clearly not sustainable over the long term.”

“We continue to work to improve revenues and reduce costs to achieve a neutral burn rate by the end of the year,” he wrote. “That includes getting smaller as we look ahead to the recovery, which is likely to be lengthy and slow.”

Nelson said she expects United to be the first of many to issue layoff or furlough warnings, saying the 60-day period to hand out WARN notices would hit around Aug. 1. 

“We’re going to be hearing from a lot more airlines about what they are predicting in terms of the numbers of layoffs for the fall,” she said. 

Airlines for America, an industry group, told CQ Roll Call it “is not seeking federal funding at this time,” even as it described the industry’s current condition as unsustainable.

The airline group said months into the pandemic, passenger volumes are still down about 74 percent and airlines are operating 59 percent fewer flights than a year ago. U.S. carriers have idled 37 percent of their fleet and collectively burn an estimated $6 billion worth of cash per month. And, with COVID-19 cases surging again, bookings for future travel are once again declining.

“The human and financial impacts of this pandemic are unprecedented,” the organization said in a statement in response to questions about industry conditions. “Despite the measures taken to protect the industry’s hardworking employees, it is simply not possible to sustain the current labor force as demand for air travel remains down more than 70 percent and carriers continue burning $6 billion each month.”

Capt. Joe DePete, president of the Air Line Pilots Association, said, “It is clear that Congress must act to extend the Coronavirus Aid, Relief and Economic Security Act, which has helped to prevent widespread layoffs of aviation workers to date.”

It’s unclear, however, what lawmakers’ appetite for renewing the program will be.

Rep. Jesús “Chuy” García, D-Ill., blasted United’s announcement in a press statement Thursday, saying it was the result of “careless management and a profits-over-people mindset.”

“Instead of holding to the spirit of the law, United is extracting cost-savings off the backs of working people,” he said. “The threat of layoffs leaves working people scrambling to pay their bills and medical expenses during this global health pandemic. United Airlines’ workers deserve better.”