United Airlines held a town hall meeting with its employees earlier this week featuring a Q&A session with CEO Scott Kirby, President Brett Hart, and EVP Kate Gebo. While each question and answer is an article in itself, one particular question on contrasting Delta and United separation packages caught my attention.
Why Are Delta And Southwest Are Offering More Lucrative Early Separation Or Retirement Packages Than United?
While the CARES Act prohibits airlines from cutting employees before October 1st, U.S. airlines are still trying to incentivize many workers to voluntary quit. Some airlines are offering more lucrative exit packages than others.
A United employee posed the following question:
“Given that all airlines are in similar financial constraints, why is Delta able to offer a richer enhanced retirement and voluntary separation program with cash severance payments based on years of service?”
Gebo, who is Executive Vice President of Human Resources and Labor Relations, answered the question.
“When you think about coronavirus, it affected all the airlines in the same way. It really hit us with demand. But, where we all started from with this virus was very different. Delta and Southwest, also just recently offered a program that had a serious large cash component to it. But they both had much higher profit margins last year than we did. They both started with stronger balance sheets than we did. So that gives them a bit of an advantage to be able to offer these types of cash severance payments.
“Additionally, Delta reduced the number of hours for the vast majority of their team before the CARES Act was put in place. So they’ve got that extra money they can dedicate to this program. Every time a new program comes out I look at it and I say, should we be looking at this too? We’re trying to fashion our program to people who are thinking about retiring now, to give them that little extra something that can help them get to retirement in a way that works for them. Large cash severance payments are not something we’re in a position to do right now. A year of continued pay in this environment is just not something that we can do at this time.”
If I can sum it up:
- Delta and Southwest had higher profit margins and stronger overall balance sheets
- Delta reduced the number of hours for employees before the CARES Act
- But wait…United has argued the CARES Act allows for a reduction in hours and has slashed the hours of management and administration employees
- Thus, they have extra money to offer more generous exit packages
- United, on the other hand, cannot afford it
And fair enough, right? Delta and Southwest were in stronger positions before COVID-19 and remain in stronger positions. Both do have extra cash on hand. Delta may be offering more generous packages to flight attendants as another incentive to prevent them from unionizing.
Delta did indeed cut the hours of most workers in March. This was a smart move, at least business-wise. For all the talk about Scott Kirby being the most blunt and most direct about the devastating effects of the pandemic, Delta moved more quickly in cutting hours and forcing employees to make a shared sacrifice. United’s more senior unionized flight attendants have made abundantly clear they will not make any sacrifices for more junior hires.
CONCLUSION
United is not offering employees as attractive an exit package as Delta or Southwest because it says it cannot afford it. That’s blunt and probably factual, but at the same time it should be no wonder why Delta and Southwest may do a much better job at avoiding involuntary furloughs and the pain and labor agitation that accompany them.
The stuff about prior year profit margin and about balance sheets is a distraction, United cut earlier and deeper than competitors, is working to get daily cash burn down lower, and takes a different view towards employees.
‘Can’t afford’ is always and everywhere about tradeoffs and priorities.
UAL had to perform a stock issuance where it diluted its equity/shareholders by 15% at the height of the pandemic when it could not affordably float bonds. UAL doesn’t have the cash for severance packages as it needs the money to survive.
Some might disagree with me, but senior management, e.g. CEO Kirby, President Hart, EVP Kebo in this case, only cares of themselves, not loyal customers nor dedicated UA employees. Had I known that one day UA would make these unacceptable changes to loyal flyers, I would have left UA and switched to another carrier long ago. As a statistician by training, the portion or even a full year of salary they claim to give up this year is very insignificant comparing to stock option, bonuses, high salary they received for many years (before). When UA made the changes to chase away loyal flyers, some employees would stand by, applaud, and defend UA management. Now see what they did to you.
Unitef management faiked to mention American’s early out program. Hmmm…I wonder why?
United’s Executive team did a terrible job of managing their budget during the easiest period of the airlines possible. The United Executive team then handle COVID worse than their peers. I guess it’s clear where the biggest cuts should be made first.
Leadership and sacrifice start from the top. Have Kirby and the other execs offered to reduce their total compensation at least proportionally to what they’re asking from combined employees? If not, then this is just more ivory tower philosophizing, shuffling deck chairs on the Titanic.
I don’t believe and a I don’t trust UAL in anyway. They don’t have the money to offer employee a good early out package, of course they don’t for the front line employee, but they have plenty of money for them (CEO) to retire with millions of dollars package and company shares and who knows what else, because they keep it to themselves.
How many millions did UAL paid Oscar Munoz to retire?
I’m a flight attendant for Delta and I can speak only of my company, I don’t know much about other airlines, at least from the employee perspective. I think our culture is very different; servant leadership, unionized, lead by example, and it starts at the top. Our CEO Ed Bastian was the first one who forfeited 6 months salary and from then on everybody across the company pitched in however they could help. Delta didn’t forced us to make sacrifices, the circumstances did. We took unpaid leaves for multiple months and now early retirement or voluntary op out, and the ones staying might be furloughed or keep flying under very different and trying circumstances. I’ really sorry to hear about what employees of other airlines are experiencing. It might take years but I really hope that with their experience and qualification they can get their jobs back when things go back to normal.
Marta, thanks so much for your comment and helpful perspective.
Marta, I am also an employee, and you are correct about the culture. I’m sure no other airline has volunteers stuffing snack bags for passengers to save on catering costs…. just one example of what sets us apart!
As a United employee if I were offered a chance to help out by stuffing catering bags or hanging out in the terminal or something I would do it and I’m sure I would have lots of company. That seems like an innovative cost saving opportunity that was lost. I will not advocate for pay cuts for our frontline workers though especially since the upper management has millions of cushion. They don’t need $500 or so a month from me and most of us are now forced to live in a very expensive part of the country given our big hubs. I hope we ALL survive this; for the employees as well as the passengers.
Spare everybody the lecture about how great Delta is. They had their entire workforce take a 25% pay cut when CARES was designed to cover employees FULL salary. There is absolutely no guarantee that anybody’s job is safer after at Delta than United’s once the cares act ends in OCT.
You seem mad? Lol DELTA gets it right 90% of the time.
Delta is great we have the best sr management and our CEO is loved there is only one Ed Bastian and thank God he is ours. You all have a lot to learn about airlines but we refer to Delta is our beloved Delta and the people in Atlanta take pride and love their home town airline. The employees that represent our beloved Delta come to work and pride.
As far as unions they are not needed at Delta and being an exEastern employee the IAM along with Charley Bryant helped Frank Lorenzo destroy the airline and people lives.
We love Delta and come to work with pride.
Our beloved Delta is the pride of Atlanta the widget is a star that shines over the state of Georgia and the city of Atlanta the Delta widget is engraved in our hearts and we all make the Delta difference for our customers. I am so sorry that you people do not love your airline you do not have an angel like Joanne Smith running your airline she walks on water along with are beloved ceo Ed Bastian.
We will always make the Delta difference and exceed our customers expectations.
God bless our beloved Delta
Richie Bayne Ambassador for Delta Air Lines Peer support Team
Pilots at Delta have certainly NOT made any sort of meaningful sacrifice like the other workgroups have. Thousands upon thousands of flight attendants and gate agents have taken multi month unpaid leaves while the pilots are all getting guaranteed 72 hours to sit on reserve and fly 1 or 2 trips a month. The sacrifice has most assuredly not been a SHARED one.
How many millions did the Delta save the company by agreeing to rerun the April bid pack and schedules? It was on the order of $20-30M+ in one month. The average Delta pilot was paid before COVID around 90 hours a month. 72 hours or less represents a minimum 20% pay cut. Delta was given the option to offer 55 hour special incentive lines (SIL) for pilots which was agreed to on March 13th. They chose NOT to offer those SILs despite negotiating for them. The reason why is something you should ask management. Don’t believe everything you hear from any airline management team. It’s not always the full truth. ALPA is the Delta pilots’ bargaining agent. Any early out program or change to their pay structure requires negotiating. ALPA has from the beginning of this crisis been willing to work with the company to come up with creative solutions they need to save money. Things didn’t get serious from the company until a few weeks ago. In short, the company wasted valuable time not working with ALPA.
PS – don’t forget the rest of Delta employees got profit sharing in years past only because it’s in the pilot’s labor contract. They also stood up to management’s attempts to weaken it in 2016.
A 20% “pay cut” for flying 90% less. Or in lots of cases, 100% less, as Delta grounds and retired entire aircraft families. Doing no work and getting to stay home, while still making bank.
Not a bad trade in anybody’s eyes.
But as is typical for a pilot, they’ll still find a way to complain and make it about themselves.
I know right? Like I said before, thousands upon thousands have taken unpaid leaves and he wants a pat on the back because they will “only” make 72 hours of pay for sitting around all month. Those poor things
Delta is great and Delta is the only airline with a heart,Delta cares about employees and has a heart full of love you all can not help you work for an airline with an IAM which is truly garbage.
God bless our beloved Delta
Thanks Richie
Delta is great and Delta is the only airline with a heart,Delta cares about employees and has a heart full of love you all can not help you work for an airline with an IAM which is truly garbage
Again again again always united why
All other airlines in this world are much better then United?
Or is just easy target ??
Is time to talk something different please
I agree UA is always targeted In the media and elsewhere… think everyone sort of knows how poor every aspect of the company is from management down to the product and service.
Your statement about senior flight attendants not be willing to sacrifice for more junior hires, is unfounded & frankly wrong! More than 11K took unpaid time off to save payroll costs, and help during this crisis. Why did you not say that senior flight crew are not willing to save their junior pilots? Rings of sexism, and misinformation.
As a junior flight attendant and without the probability of getting completely hanged for my comments look at the people that took voluntary leave, look at the seniority, please senior flight attendants DID not move an inch to help the company or junior people. Just so glad you’re all going to be on reserve after treating juniors so badly for years, always with the “if you don’t like it there’s thousands that would kill for you job” well here we are and we can actually start over again, but this has been your whole life and not a penny was saved so you can’t retire.
Thirty years here and I took a leave, as did about 800 people senior to me in just my base alone. Get your facts straight before you start bashing the seniors. Your me me me attitude does nothing to garner support from your more senior and more experienced colleagues. Enjoy your furlough in October.
Oh, Eva, you know not what you speak…or type. Unfortunately, there’s always been a conflict between the senior and junior flight attendants and I’ve often wondered why. I’m neither senior nor junior as a 21 year flight attendant, but I’ve witnessed senior fa’s, incorrectly, assume things about junior fa’s. I’ve also seen a lot (much more than normal) of junior fa’s thinking they know it ALL when it comes to our job and industry as a whole. You can learn a lot from those seniors and how the industry has affected their careers…and if you listen carefully, you just might learn something that will help you with the future of your career too.
Little tired of you bashing senior United FAs.
We all at some point were junior in the company and had to pay our dues.
I went through 9 11, bankruptcy, enormous wage and benefit lose,involuntary furlough, had to have the same contract for 15 years, went through an eight years merger when new hire on the CO side would hold international routes while UA FAs were back on reserve after 20 plus years.
So please stop your ridiculous bashing of senior FAs.
Most junior peeps can start over a little easier than a 53 year old FA having a 25 years in the FA business.
So what say you?
There is a like clause from an earlier buyout. United can’t give money, because it would have to match that amount to everybody that has retired since the merger.
Exactly!
Marta, the irony is that the market seems to be rebounding quicker than Delta has been willing to add back capacity. I hope Delta (and other airlines) would add capacity faster to get its employees working and providing more options for flyers. Southwest seems to be doing a better job with scheduling than DAL right now.
United tried to say that their share of Boeing Max grounded within their fleet contributed to their inability to match Delta.
United slashed 8000 iam members from 30 hrs to 20 hours, with iam consent. Essentially, these part time workers subsidized the fulltime. But yes, United already slashed all of its part time iam work force up to 33% of their hours. The iam doesnt talk about this.
There is no airline like our beloved Delta our CEO has a heart of gold you do not know what love and kindness is until you come to Atlanta and watch our employees interact. Remember When God Created the Stars to light the Heavens He made one Star in the Shape of a widget and that is the light of our beloved Delta that star will shine forever.
Richie Ambassador for Delta Air Lines
The IAM should go to hell they helped Frank Lorenzo destroy Eastern.
They do not care about people they have no conscience
The last thing we need at Delta is a union our management has a heart ❤️ and cares about people and Is very honest.
There is nobody in the world like Ed Bastian and Joanne Smith and the rest of our senior leaders. Joanne and Ed make the Delta difference everyday and exceed internal customers expectations.
People first then money
Richie