The CEOs of major US airlines are continuing their advocacy for another round of government support. After receiving $25 billion of payroll assistance in March and another $25 billion available in the forms of loans, US airline CEOs are hoping for a clean extension of the aid from March.
Airline CEOs are still pushing for more government support
The United States is less than two weeks away from tens of thousands of workers being furloughed in the airline industry. Most of the major airlines in the United States have announced impending furloughs for workers.
Almost since March, there has been an effort to secure additional funding for airlines. At the start of the summer season, with a slight uptick in travel, the industry appeared to make quick progress towards a full recovery. By midsummer, however, it became clear that the airline industry was not going to see a “V-shaped” speedy recovery, nor a “U-shaped” prolonged recovery, but a choppy and unpredictable recovery. Therefore, airlines and unions are left scrambling.
Just this week, prominent airline CEOs spoke with politicians in Washington on the need for additional funding. On Friday, sources told Reuters that Nancy Pelosi and House Transportation Committee Chairman Peter DeFazio spoke not just with airline CEOs, but even with labor union heads, such as Sara Nelson, the President of the Association of Flight Attendants-CWA International.
This was preceded with a Thursday White House meeting between US airline CEOs and Chief of Staff Mark Meadows, according to a report at CNBC. In attendance at this meeting were American’s CEO (Doug Parker), Southwest’s CEO (Gary Kelly), and United’s CEO (Scott Kirby), Alaska Airlines’ CEO (Brad Tilden), and Hawaiian Airlines’ CEO (Peter Ingram). After both of those meetings, it appeared that there was some appetite to get started on a bipartisan package to save jobs, though a new wrench has left even that unclear.
It was only a couple of weeks ago when Senate Republicans revealed another stimulus package to aid in the recovery. However, that package did not include any support for US airlines. Discussions, at the time, continued, and that proposal is far from guaranteed to be enacted in its current form.
What is the math behind furloughs?
Most US airlines are going to furlough employees. American Airlines is expecting to furlough about 17,500 employees, nearly 2,000 Delta pilots may see furloughs, United has plans to furlough up to 16,000 (though it appears the airline has reached a deal to avoid pilot furloughs), Hawaiian Airlines cut down its furlough numbers recently down to around over 400, among others.
Airlines want a clean extension. That is, another $25 billion in support to cover October through March. This comes all the while the industry has already shrunk with thousands taking unpaid leaves or early retirements, or other packages. Plus, by the time March 2021 rolls around, almost no one anticipates the industry will be anywhere near completed with its recovery, with models predicting it will take out to 2023 or 2024 for the industry to get to 2019 levels.
Moreover, some airlines have successfully avoided furloughs. Southwest has no plans to furlough anyone as of now. Delta has avoided furloughs for flight attendants. United appears to have done the same with pilots. Spirit Airlines also worked out a deal to prevent pilot furloughs.
So, essentially, those $25 billion will go to support the same amount of jobs that there were in March, even though there are not as many people still working for carriers. Plus, it would be pretty awful for employees who took voluntary unpaid leaves or early retirement to know they might not have had to because of additional support.
There is an enormous political calculation
2020, an awful year on record, is also an election year. This has led both Republicans and Democrats in Congress to camp out in their corners, trying to navigate the best course to win the most seats in Congress and the White House. There has not yet been an announcement of the new stimulus plan, and all sides continue to negotiate. Getting one finalized and passed before October 1st is a hefty challenge.
Election Day 2020 is on November 3rd, and there is a lot at stake for both parties. The recent death of the iconic Supreme Court Justice, Ruth Bader Ginsburg, has also led some political handicappers to speculate that the Supreme Court seat could be more important in this election than the stimulus and others have theorized a deadlock on the stimulus or US budget to force one side to either fill or keep vacant Justice Ginsburg’s seat.
All in all, while there is some merit to airlines receiving additional aid, there are so many outside forces in play that could intervene and deny the airlines any additional funding, leading to tens of thousands of October furloughs.
Should US airlines receive additional funding from the government? Do you think airlines will receive another round of government support? Let us know in the comments!