A Delta Air Lines representative helps a customer in Los Angeles, California on April 16, 2020 at an almost deserted international airport in Los Angeles.
David McNew | Getty Images
Thousands of US airline employees are forced to gamble with their careers.
Airline managers are asking their staff – from flight attendants to mechanics to marketing managers – to consider voluntary separation or early retirement packages to cut costs after the demand for air travel has declined this year and has been the lowest since 1950s reached in April. Labor is generally the largest cost to airlines, and the number of U.S. passenger aircraft has increased 20% to 459,000 people in the past decade, according to the federal government.
"I'm not ready to say goodbye to my career," said a flight attendant from Newark, New Jersey, at United Airlines, who said she didn't choose any of the voluntary options.
Airline CEOs have warned that they are likely to operate smaller airlines and require fewer employees, and they wanted to avoid involuntary cuts such as vacation and layoffs. The industry is losing money for the first time in years due to the coronavirus pandemic.
United's new CEO, Scott Kirby, who took the helm in May, said last month he wanted to work with unions to lower the airline's labor costs and avoid vacation.
"If we can keep them a little on the sidelines as we get through the crisis, we can snap back quickly if there is a recovery and there will be a recovery," he said.
For its part, the Southwest is trying to avoid its first vacation days and layoffs in its 49 flight years through takeovers and other voluntary measures.
Time is running out
The clock is ticking. The terms of a $ 25 billion federal aid package prohibit airlines from dismissing or lowering employee wage rates before October 1, and some airlines give ordinary employees the option to opt out of a buyout by this month . If not, workers will have to check whether their jobs will be cut this fall after the aid ends.
Airlines have parked hundreds of planes and cut their flight schedules to cut costs. Travel demand has increased in recent weeks as states lift housing orders to stop the virus from spreading and the high season for spring and summer travel begins. However, it is still below one fifth of the previous year's level.
Airline chiefs recently said they didn't expect a surge in demand for what they enjoyed last year, according to the Department of Transportation, when U.S. airlines flew a record 946 million passengers.
Some airline employees who spoke anonymously because of concerns about the risk to their job said they found voluntary separation or similar packages difficult.
Since the entire aviation industry is affected by the pandemic, they cannot get up and leave for another airline. Unemployment has improved over the past month, but is still high in the United States. Seniority is a pillar of aviation frontline pilots and flight attendants, even if they could find another job Starting over elsewhere would mean giving up the benefits of years, such as selected goals and timelines.
"I felt that it was better to be an active employee than not … and I felt that with my company I have a little more control over my income than with unemployment insurance," said one more than United's 30-year-old flight attendant decided against one of the voluntary options.
United, Delta, American and Southwest have offered these voluntary separation packages to at least some of their employees. During the winter, when the corona virus began to spread in the United States, airlines also offered temporary, partially paid, or unpaid free time as part of their initial cost-cutting efforts. More than 120,000 people volunteered for part of the vacation in America, Delta and United, more than 30% of their employees.
"This is the job I'm going to retire from," said an Alaska Airlines flight attendant from Seattle. "This is just another storm we have to weather." She said she volunteered for an unpaid month because she had a two-income household.
"There's an overwhelming feeling that vacation is inevitable, and maybe my month-long vacation can save a job in the future," she said. "It can even save my own job."
A six-year-old American Airlines flight attendant from Miami said he would not exercise any of the voluntary options.
"I'll be really honest, my answer is a tough no," he said. "As much as we complain about it, we absolutely love this job."
The permanent separation packages vary, but airlines offer years of free flights based on vacancy and health insurance. For example, Southwest offers cash compensation based on years of work, one year of occupational health care, and four years of travel privileges for those who put their hands up to leave voluntarily.
Employees who have worked at the Dallas-based airline for a decade or more are entitled to 12 months' compensation, "in recognition of their service to Southwest Airlines," said a spokeswoman, adding that the programs "are the most generous packages." that have ever been offered Southwest's history will help align the workforce with the current decline in demand due to COVID-19. "
Some employees do not want to take their risk.
"I took it because I don't think many people, if I'm realistic, will (or want to) take the voluntary vacation," said an American Airlines manager who volunteered for a buyout. "The risk indicator is far too high."
American plans to reduce the number of employees in management and administration by around 30%. This is a similar percentage that United is aiming for, and corresponds to approximately 5,000 job cuts.
The Fort Worth, Texas-based airline offered up to 30 years of travel benefits and a third of payment until September 30, or five years of travel for a third of payment until December, and warned employees last month that there would be no severance payment when they are released. These workers have until Wednesday to apply. The carrier recently set severance packages for high-level employees, according to those familiar with the matter.
Both American and United are reducing their number of officer-level positions and reorganizing their top ranks.
"Attractive to someone"
Delta, the least unionized of the major airlines, has negotiated early retirement and other options with the union, which represents its more than 13,000 pilots. The union pushed for reduced vacation days to save money, but failed to reach agreement with the company by early June.
"We are in the late beginnings of the ball game," said Chris Riggins, Delta pilot and chapter spokesman for the Atlanta Pilots Association chapter.
Unlike previous downturns, companies like airlines are taking a number of measures to cut labor costs rather than just layoffs, said Tom McMullen, senior client partner at Korn Ferry.
"Depending on where you are in your life or career, this is likely to be attractive to someone who is about to retire," he said.
"We need to make sure we license our company accordingly," said Doug Parker, CEO of American, in a webcast for investors on May 27 about possible cuts when the conditions for state aid expire. "So we'll try to do it so that hopefully we won't even have to take someone off."
While airlines cannot take vacation or lay off workers before October 1, employees may be informed of the cuts in the summer.
Airlines are not the only companies in the aviation industry that are hurt by the Corona virus toll while traveling. Boeing is reducing 10% of its 160,000 employees and, in addition to buyouts and other options, has offered almost 7,000 layoffs last month, as the market for new aircraft is grim. General Electric, which produces engines for Boeing and Airbus aircraft, will cut around 25% or around 13,000 jobs in its aviation department.
Tighten the belt
Some airline employees say they adjust their expenses to prepare for the worst and start thinking about contingency plans like other work areas or moving to other cities.
"My plan is to save, save, save," said the six-year-old American Airlines flight attendant from Miami.
A four-year-old Delta pilot said he was going on vacation in the Middle East, scrapping plans to build a deck for his house, and shifting the paintwork on his old Volkswagen motorhome.
A nearly three-decade United employee working in the union representing customer and fleet service employees looked back on other moments of turmoil in the industry: September 11, 2001, terrorist attacks, a wave of bankruptcies and mergers, and the Great Recession.
"This is the first time I'm really afraid of what our future will be like," she said.
She said she didn't plan to apply for a voluntary separation package, but she and her husband, another United employee, had discussed whether he would have to move if he got a job in a different base. One consideration is the junior high school child.
"Are we going as a group? Split up? Are you trying to commute? It's a really big decision," she said. "This is the first time that he and I have had to look at it."
Controversy over the wage rate
While the $ 25 billion that U.S. passenger airlines are earmarked for under the $ 2.2 trillion CARES law passed in March does not allow airlines to take vacation, lay off, or lay off their workers' wages To cut down, airlines like Delta, United, and JetBlue have reduced their workers hours, which means smaller paychecks as flight and revenue decreased.
The practice has been reviewed by democratic lawmakers and at least one Republican senator who claims that this violates the spirit of the law.
A group of Democratic senators, including Senator Elizabeth Warren, D-Mass., Asked Treasury Secretary Steven Mnuchin to clarify that they cannot. Warren and several other democratic legislators wrote to Delta and JetBlue CEOs, who are also largely non-unionized and can therefore more easily shorten working hours to respond to the reduction in working hours. Delta has cut most workers' schedules by 25%. The finance department declined to comment.
"Not only was there little to do, it was also dangerous to keep Delta employees unnecessarily in large public spaces during an angry pandemic," said Ed Bastian, Delta CEO, in a letter to Warren. "The lack of travel due to government mandates and health advice has also reduced working hours for our pilots and flight attendants. In accordance with the requirements of the CARES law, Delta employees continue to be paid the same wages."
"The best performance in the world"
The airline's CNBC officials said they would not have expected federal aid to save their jobs if travel demand did not recover.
While they were up to date on the future, everyone shared how much they loved their work, saying how each day was different and of course the benefits: free flights around the world and the joy of jumping off immediately for fun or departure enjoy a long stay in another city.
"South Africa. I love Brazil. Latvia," said the Delta's first officer, listing some of his favorite destinations he had visited for his work. His wife often accompanied him on trips.
"It's still the best gig in the world," said the 30-year-old United flight attendant. "My earliest and favorite stay was Rome."
The worst of the demand crisis appears to be behind the US airlines as signs of renewed appetite for travel appear and the airlines are resuming service for the summer.
According to the Transportation Security Administration, more than 2.5 million people passed through the checkpoints of US airports in the first seven days in June. That's more than 85% less than in the first week of June 2019, but more than twice the number in the same period in May and more than three times the number in the first seven days in April.
United's longtime flight attendant said, "I hope for the best, because that's what you're doing."
What airlines do to clean their planes