Georgia-based ExpressJet Airlines has announced that it will cease operations at the end of September. The reason behind the decision was two-fold. Firstly, due to a massive drop in passenger demand, and secondly, United Airlines’ decision to consolidate its regional business with another carrier.
The all-Embraer ERJ-145 airline said yesterday that it would terminate operations on September 30 and lay off most of its 3,000 employees. Coincidentally, the September 30 deadline is also the day that the airline’s financial assistance from the United States government ends.
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ExpressJet’s only customer was United
Other than the Chicago-headquartered United, ExpressJet had no other customers. In a statement released by ExpressJet carried by the aviation website FlightGlobal, ExpressJet said,
“On July 30, United Airlines selected CommutAir as its sole ERJ-145 operator, and asked ExpressJet Airlines to wind-down flying as a United Express regional carrier,” the airline says. “Due to the uncertainty of airline passenger travel as a result of the continuing pandemic, all ExpressJet flying for United Airlines will end on September 30, 2020.
“In addition, with the termination of the CARES Act payroll support funding at that time, ExpressJet also will terminate or furlough most of its workforce on September 30, 2020, other than limited staff needed in connection with the wind-down of operations and the review of future business opportunities.”
The RAA has blasted lawmakers
President and chief executive of the Regional Airline Association (RAA), Faye Malarkey Black lambasted lawmakers for not addressing airline payroll protection saying they had left “a giant question mark hovering over whether or not the payroll support program would be extended as the pandemic rages on and demand remains enormously depressed.”
ExpressJet knew that its affiliation with United Airlines was coming to an end after United said it would consolidate its regional partner to just one airline in July. That airline is the Cleveland, Ohio-based CommutAir of which United Airlines owns 40%.
Earlier in the year, United Airlines cut its ties with another regional carrier, Trans States Airlines, which also wound up its business after being dropped by United.
ExpressJet is now the third US regional airline after Trans States Airlines and Compass Airlines to go out of business. Before COVID-19, ExpressJet flew to more than 100 destinations in the United States, Mexico, and Canada with a fleet of 95 Embraer ERJ-145s.
The financial aid stops on October 1st
In the wake of the global health emergency, the United States government stepped in to help prop up the airline industry with nearly $60 billion worth of grants and loans. To qualify for financial assistance, airlines had to agree to no layoffs before October 1st.
With this deadline now fast approaching and the government on summer vacation, we could see as many as 80,000 airline jobs disappear. Given that elections are due in November, we can expect to see congress brought back early and a second stimulus package passed to avoid massive unemployment. For airlines, however, given the current environment throwing money at the problem is just a Band-Aid for a wound that requires amputation.
It is not surprising the United Airlines wants to consolidate its United Express regional operations with one airline of which it partly owns.
Do you think that American and Delta might do something similar? Please let us know your thoughts in the comments.