Now that furloughs have been announced, the failure to secure a second bailout for airlines is no longer theory, rather it’s reality.
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First Bailout Labor Guarantees Have Expired
Per the requirements of the $25 billion bailout airlines received as part of the Payroll Support Program, the carriers could not involuntarily terminate staff any early than Sept. 30. However, those requirements expired on October 1st and to the day, most US carriers have let staff go at the first available opportunity. Without a second bailout, the airlines were no longer required to hold staff and didn’t have the money or path to growth to maintain them.
Airlines for America, the industry lobby group, originally requested more than $50 billion.
How Many Are Furloughed?
It’s hard to be able to track just how many will be lost in total from the workforce because the airlines offered voluntary buyouts separate from the published furloughs. To that extent, Delta Air Lines announced they won’t have to involuntarily furlough any airline workers as has JetBlue. Southwest Airlines also offered voluntary buyouts but didn’t take employment-restricted government bailout funds so the expiry was irrelevant.
United Airlines furloughed 13,000 on Tuesday, American added another 19,000 to the unemployment rolls, Alaska laid off just 500 despite best efforts from employees. Spirit was able to gauge down their planned furloughs to just 200 pilots after reaching an agreement with the airline’s pilot union, Allegiant another 100 pilot jobs lost. Frontier last reported an expected furlough of nearly 1,500 employees.
In total, no less than 35,000 airline employees lost their jobs in the last week; but Delta’s statement suggests that as many as 40,000 could have been affected at the Atlanta carrier alone. The total number of passenger airline jobs lost since the beginning of the crisis could total as many as 100,000.
What Will They Do?
In the past, when the domestic airline industry contracted there were options abroad. While flight attendants and ground personnel were less likely to find work abroad, pilots often find success flying in other countries. However, this year that isn’t an option even for the usually protected pilots. Even if Congress passes a COVID-19 bill, President Trump signs it promptly, the public receives substantial stimulus checks, and airline chief executives quickly add back capacity with however many billions airlines put into the bank, air travel still won’t be back to 2019 levels.
With the usual channels closed, and voluntary offers off the table the future is bleak. As if it couldn’t get any worse, the global and especially the domestic economy doesn’t offer shelter as travel demand has evaporated. Many airline professionals are highly trained with a very specific skillset – it’s not something they can utilize in other adjacent industries the way a business manager may become a salesperson or a consultant.
Speculating as to how furloughed staff will re-assert themselves in the workforce may find that many move to new roles, some return to school, and those with the means may wait things out. Anecdotally, some flight attendants have shared with me their plans to ride out the industry downturn as long as they can in the hopes that the industry will re-emerge.
Update: In the months since this was written, the travel industry has completely reversed course. The industry is now facing labor shortages and all-time record high traffic that places more seats and more travelers on airplanes than were previously onboard at the industry height in 2019. Interestingly, many who were offered buy-out packages have not returned to the industry causing American Airlines and Delta to cancel flights due to lack of pilots.
Conclusion
In addition to tens of thousands of airline employees now looking for work, Disney just laid off another 28,000. While they don’t find themselves with the same training, they are all in the same situation today. I’ve argued both for and against a bailout because frankly, both arguments have merit. In the argument for bailouts, the difficulty of placing the workers or carrying them without work would be less fruitful holds weight here. However, now that the second bailout hasn’t occurred, there have been six-months of employment of those professionals at a cost of $25 billion in loans (the first bailout), of which very little went to the workers.
What do you think? What comes next for the tens of thousands of furloughed employees? Should there have been a first bailout or a second?
Note: This post is compliant with the California “Do not sell my personal information” act.
“Southwest also offered voluntary buyouts but didn’t take government bailout funds so the expiry was irrelevant.”
Southwest took $3.3 billion in payroll support funds, which included the no-furlough through September 30 stipulation. The airline declined to take subsidized loans (which also had employment provisions though also only through September 30).
I added a qualifier to the post.
I feel bad for FAs and anyone whose lost their job but is “waiting this out” is the stupidest thing someone can do. Travel isn’t rebounding soon, certainly not soon enough to put thousands back to work.
A lot of the time when an industry collapses people change industries but where do these people go. Movie theaters are possibly going to be closed for months if maybe never returning. Restraunts are keeping staff numbers love. A lot of lower skilled work that someone might be able to do in the meantime has no vacancies.
I have met incredibly highly trained individuals in FA roles, who spoke multiple languages and just have a way with people.
In a socially distanced world, having a professional so customer-centered as a good FA would be a blessing for many companies.
So I would say many will find work in:
– the high-end personal-services sector, which should grow with more of the higher-middle-class opting for at-home one-on-one service;
– sales and customer service;
– new-channel luxury promotion;
– translation and PA work.
Your speaking to the exception not the rule.
If most FAs has those talents they wouldn’t be FAs getting paid what they get paid.
@Will – Respectfully, many talented, highly qualified FAs just love what they do and while the money isn’t ideal, it’s worth it. Perhaps in the same regard as teachers who know the low wages going in, but aren’t there for the money.
Understood and agree.
Most, if not all, flight attendants have a college degree. I know a degree isn’t technically required, but in 30 years at 3 airlines, I have never met one without at least a 4 year degree. A significant number of us have advanced degrees, too. I’ve worked with lawyers, dentists, college professors, teachers, nurses, etc, who chose to work as FAs. It’s a pretty awful time to be starting a new career, but despite the way most blog readers see us, flight attendants aren’t really a “low skill” group.
Exactly! It’s insane to think that people only have one skill set or that their skill sets can’t transfer over into other jobs/careers/industries. Customer service experience and having “a way with people” can be carried over into many different roles. Personally I know people who formerly had airline jobs who now have other jobs serving the public. One person I know almost started working for an airline, but he chose to go into Psychology/Social Work instead and also works for the Red Cross.
Why treat a large employer any different from a small one? The airlines got billions for very few jobs saved
They could have given everyone laid off in the airline industry 50k per year for next 5 years and the cost would have been 25 billion – which is what they spent for 5 months instead of 5 yrs.
In the PPP loan, they maxed payroll support up to 100k for 2 months only for millions of small businesses
By just paying up to 50k and letting the industry survive with 20 hrs a week of payroll support, that would have done more than supporting the share price of bankrupt airlines
Why reward Dougie at AA when he bought back $14 billion of shares and took $14 billion of loans?
AA should be allowed to go bankrupt and be acquired by Southwest – They surely know how to run an airline better
Why reward Scott Kirby at UA in the same situation – laying off younger workers at the union that failed to protect their jobs while DL keeps them on while nonunion?
The US would be better served by letting Dl and SW which do not take too much debt take over the bankrupt airlines
Lastly, airlines as a public service should not be allowed to take on debt or reward execs above 200k a yr
I’m someone in favor of stuff like health care for everyone but bailouts for the airlines? No way. Either help out everyone with money going directly to the person or don’t do anything. This stuff of giving it to some industries but not others is stupid and artificially props them up.
Right now we have no idea whether this situation will last 3 more months or 5+ years. Everyone wants to return to “normal” but we may never reach that again. An unpleasant thought especially for someone like me in my late 50s but thinking this will magically go away is crazy.
Airlines need to be much smaller. They will require fewer employees and aircraft. Time to face reality and rip th3 band aid off. There is no reason to spend additional billions.
“An unpleasant thought especially for someone like me in my late 50s but thinking this will magically go away is crazy.”
Ah, but the Great Wizard of Deleware tells us we have just to wear our masks, click our heels three times and all will be well. He also told us that more rapid testing was what would save the land of Oz, but that did not turn out to be the case as the rose garden may have turned into a deadly poppy field. (“The seriousness of this virus also underscores how we need regular testing with results turned around rapidly and available to everyone,“ said Biden in Michigan. “It’s not just the folks in the White House or travel with me who deserve regular testing…every single American deserves safety and peace of mind.”) The White House became ground zero and showed that no amount of rapid testing keeps COVID-19 at bay – safety and peace of mind don’t follow everyone getting rapid testing. That is the truth behind the wizard’s curtain. So does that make Biden crazy? Probably not. But masks and rapid tests provide no miracles -strict social isolation and quarantine block transmission – no exposure, no COVID-19. It worked for China, but then America is not China. Biden would tell us he would lock down America, but he won’t call for an end to BLM protests and riots. Shutter the churches, but litter the streets with protestors and rioters – that is crazy.
I think the great wizards have told you that when R gets to 1.3, the virus infects exponentially. When something like a mask drops that R by about 30%, and R drops to below 1, then outbreaks extinguish. It’s much like the sum of an infinite geometric series or the amount density of nuclei you need to achieve critical mass.
You may think it’s obvious that the earth orbits the sun, but an astrophysicist will tell you that’s actually not true. This is the case here with masks. The experts aren’t conspiring against you; they are thinking about it in different and more nuanced terms.
Spirit Didn’t furlough at all….