COVID-19

Airlines seek additional federal funds to keep staff on board as pandemic continues

Mitchell Hartman Sep 18, 2020
Heard on: Marketplace Morning Report
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Southwest Airlines Chairman and CEO Gary Kelly, center, speaks with other airline executives after a meeting at the White House regarding an extension of federal aid on Sept. 17. Win McNamee/Getty Images
COVID-19

Airlines seek additional federal funds to keep staff on board as pandemic continues

Mitchell Hartman Sep 18, 2020
Southwest Airlines Chairman and CEO Gary Kelly, center, speaks with other airline executives after a meeting at the White House regarding an extension of federal aid on Sept. 17. Win McNamee/Getty Images
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Executives with the biggest U.S. airlines — including Delta, United, American and Southwest — met with White House Chief of Staff Mark Meadows Thursday. 

The companies and their labor unions are pressing for another round of $25 billion in federal aid to help them get through another six months of the pandemic, which has caused air travel to plummet. They say it’s the way to avoid tens of thousands of layoffs across the industry.

As air travel plummeted in the spring, the airline industry got $25 billion in federal aid. And there was a big string attached: no involuntary furloughs or layoffs of airline employees.

The airlines did offer voluntary furloughs, buyouts and early retirements to cut labor costs. The workforce is down roughly 20%, according to figures from the Bureau of Labor Statistics.

“But that’s nowhere near the 70% reduction in passenger volumes. They’re not doing enough flying to actually support their current headcounts,” said Colin Scarola, equity analyst at CFRA Research. He estimates airlines could lay off as many as 50,000 employees starting in October.

The companies say another round of relief money could prevent layoffs.

But Madhu Unnikrishnan at Airline Weekly says the airlines don’t have enough revenue to keep all those employees around in the long run. Business travel is down more than 90%.

“And then also international travel is almost gone and probably not coming back anytime soon,” Unnikrishnan said.

In the meantime, the airlines are cutting routes and borrowing to stay financially aloft.

COVID-19 Economy FAQs

How many people are flying? Has traveled picked up?

Flying is starting to recover to levels the airline industry hasn’t seen in months. The Transportation Security Administration announced on Oct. 19 that it’s screened more than 1 million passengers on a single day — its highest number since March 17. The TSA also screened more than 6 million passengers last week, its highest weekly volume since the start of the COVID-19 pandemic. While travel is improving, the TSA announcement comes amid warnings that the U.S. is in the third wave of the coronavirus. There are now more than 8 million cases in the country, with more than 219,000 deaths.

How are Americans feeling about their finances?

Nearly half of all Americans would have trouble paying for an unexpected $250 bill and a third of Americans have less income than before the pandemic, according to the latest results of our Marketplace-Edison Poll. Also, 6 in 10 Americans think that race has at least some impact on an individual’s long-term financial situation, but Black respondents are much more likely to think that race has a big impact on a person’s long-term financial situation than white or Hispanic/Latinx respondents.

Find the rest of the poll results here, which cover how Americans have been faring financially about six months into the pandemic, race and equity within the workplace and some of the key issues Trump and Biden supporters are concerned about.

What’s going to happen to retailers, especially with the holiday shopping season approaching?

A report out recently from the accounting consultancy BDO USA said 29 big retailers filed for bankruptcy protection through August. And if bankruptcies continue at that pace, the number could rival the bankruptcies of 2010, after the Great Recession. For retailers, the last three months of this year will be even more critical than usual for their survival as they look for some hope around the holidays.

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