July 24, 2024

The Queens County Citizen

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The airline will cut jobs this fall. Waiting until then caused a big problem

The airline will cut jobs this fall. Waiting until then caused a big problem
That Federal bailout for the aviation industry prohibits layoffs, unintentional paid leave or salary for employees. But executives have blunted that the termination of employment will come after the ban was lifted on October 1, with an estimate that up to a third of the sector’s work could disappear.
The airline has requested that workers take voluntary leaves that are not paid or underpaid. Around 100,000 workers in the four largest operators – America (AAL)United, Delta (DAL) and Southwest – have done so, equal to around 26% of company staff by the end of 2019.

But even at that voluntary rate, $ 25 billion in grants and low-interest loans from the federal bailout known as the CARES Act, airlines are bleeding millions of dollars a day. The industry’s first quarter loss totaled $ 2 billion. The second quarter will be much worse.

That’s largely because federal assistance only covers about two-thirds of total labor costs until September, said Philip Baggaley, chief credit analyst for airlines at Standard & Poor’s. He believes that between 20% and 30% of airline work can be eliminated through purchases and early retirement offers, along with accidental layoffs.

Southwest (LUV) CEO Gary Kelly said on CNN this week that the airline would do “everything we could to keep the job.” But he pointed out that federal grant money went directly to airline employees, and did not cover all company salaries between now and September 30.

“We have a lot of cash today, but we spent almost one billion dollars in April for example,” he said. “So you do the calculation in your head and you can’t survive like that.”

The deep and permanent cuts in well-paying jobs found throughout the industry will inevitably fall, even if the economy has improved by then, because it is clear that it will take years for air travel to return to previous levels.

“In the end, we might see 95,000 to 105,000 jobs lost in the US aviation industry,” Helane Becker, airline analyst at Cowen financial services company, said in a note.

Airlines are experiencing heavy losses now, in part because they cannot leave or cut their staff deeper despite bare flight schedules, even though passenger traffic has basically fallen to zero.

“Our schedule is down 90%. And we plan to stay at that level until we start seeing demand recover,” said US President Scott Kirby. “If demand remains significantly reduced by October 1, we will not be able to endure this crisis as a company without implementing some of the more difficult and painful actions. These include decisions about unintentional leave, further reductions in hours, and other actions that will be have a direct impact on our people and their livelihoods. “

Unite (UAL) this week told many nonunion workers – 11,500 management and administrative employees at the airline – that they plan to cut staff at least 30% on October 1. That is the most detailed estimate of the reduction in employment of one airline.
The airline also ordered the non-union employees to take 20 days of unpaid leave between now and 30 September. JetBlue (JBLU) has ordered paid staff to take 24 unpaid days during the same period. Both airlines say the number of days off was reduced to working hours, which is permitted under the CARES Act, not accidental termination of employment.

But unions who are struggling with management to get the CARES Law passed have objected to several steps to cut airline costs. The Machinists Union, which represents 27,000 ground workers at United, including baggage handlers and customer service staff, filed a federal lawsuit this week to block United from cutting members’ hours to 10 hours a week.

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United withdrew and cut hours voluntarily rather than mandatory, although it was said there might still be mandatory cuts if there were not enough volunteers. Company emphasized that the reduction in hours permitted under the CARES Law and employment contract.

Even if there is no ban on layoffs, airlines will not cut jobs as deep as they have cut their schedules, said Baggaley S&P.

“They will not be able to cut to that level and have a decent airline out the other side,” he said.

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