Now that furloughs have been announced, the failure to secure a second bailout for airlines is no longer theory, rather it’s reality.
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.
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.