Tens of thousands of good-paying airline jobs could be lost as soon as Thursday, as a federal prohibition on jobs cuts in the industry is set to expire. But hopes still remain for an 11th hour deal to avoid the cuts.
Airline executives say they are prepared to keep workers on the payroll if Congress shows signs it will approve an additional $25 billion in grants to the battered industry.
“If there’s a clear and concrete path that says we’re not quite done yet but we will be done soon, of course [we’ll avoid job cuts],” said Doug Parker, CEO of industry leader American Airlines (AAL) said in an interview with CNN Wednesday.
Treasury Secretary Steven Mnuchin told CNBC earlier in the day that he would be urging airline executives to delay any job cuts as he and House Speaker Nancy Pelosi try to reach a deal on a new stimulus package.
Parker said he and other airline executives are pleased with prospect of progress. But he cautioned that airlines might still have to go ahead with furloughs in the absence of assurances that a deal is close. American has plans to cut as many as 19,000 jobs.
“If it’s ‘We need much more time to work’ and unclear whether we can get something done, that’s going to be much harder,” he said.
In addition to the cuts planned at American, United Airlines (UAL) is considering 12,000 job cuts. Then there are about 17,000 job cuts looming at other airlines across the US industry.
Unions have been reaching deals with airline management to try to delay or cancel furloughs even without a new round of federal help in place. The Air Line Pilots Association reached a deal with United Monday that would eliminate 2,850 furloughs for its members. Delta Air Lines (DAL) has also agreed to delay pilots furloughs until at least November 1. It’s possible other unions could reach deals with airline management as well.
The probation on involuntary job cuts in the industry expires Thursday. That ban that took effect when the airlines accepted $25 billion in federal help earlier this year. Although seven airlines are preparing to accept another round of loans also approved earlier this year, those loans don’t come with the same prohibition on job cuts.
The airlines have bipartisan support for another round of federal help. At an event last week, Rep. Peter DeFazio, an Oregon Democrat and the chairman of the House Transportation & Infrastructure Committee, and Rep. Sam Graves, a Missouri Republican and the ranking member on that panel, both voiced support for the airlines getting additional help to avoid job cuts.
The airlines, the unions and their supporters in Congress argue that if the jobs are lost, it will be much tougher to bring people back to work than in other industries due to the training and certification required for airline workers.
Air traffic has picked up from the more than 90% drop where it was in late March and April, when the first round of assistance was passed by Congress. But traffic passing through TSA checkpoints is still down about two-thirds from year-ago traffic levels, and airlines aren’t expecting a total recovery for years.
But the industry has already trimmed about 45,000 jobs through various voluntary buyout and early retirement offers to their employees. Executives say those voluntary departures, combined with hopes of recovery once a Covid-19 vaccine is available, is the reason they only need another six months of help.
“In recessions you don’t see the airlines ground aircraft like we’re doing today,” Parker told CNN. “What I anticipate will happen is we continue to see gradual improvement over the next six months. It doesn’t need to be all the way recovered by any means but say 80% of what it used to be, we’d be flying all of the airlines, we’d be needing to employ all of the people we have employed.”