Airlines

JetBlue puts raises, paid parental leave on hold to cut costs in 2021 as Covid hinders travel rebound

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Key Points
  • JetBlue is planning to cut costs further next year as coronavirus cases continue to stymie a travel recovery.
  • Executives will continue to take reduced pay into 2021 and the airline will hold off on raises and paid parental leave, according to a memo.
  • The airline said nonunion employees are safe from furloughs through "at least" Sept. 30, 2021.

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A Jet Blue aircraft takes off from Long Beach Airport in Long Beach, CA.
Tim Rue | Bloomberg | Getty Images

JetBlue Airways on Tuesday laid out a host of cost reductions for next year as the worsening coronavirus pandemic promises another difficult year for airlines.

Top executives' reduced salaries will continue into 2021 and the airline will pause merit raises for most employees, according to a company memo that was seen by CNBC. JetBlue declined to comment beyond the memo.

Airlines are struggling to slow their cash burn as air travel demand is about a third of last year's levels. Executives at JetBlue, Delta, American and other airlines have recently reported a slowdown in bookings as new Covid cases spiked and federal health officials warned against holiday travel. JetBlue last week announced a $506 million stock sale to further shore up cash.

"We are finalizing next year's budget now and there is no doubt it will be the most challenging in our history," Mike Elliott, JetBlue's chief people officer, said in the note to employees. "We are planning for revenue to be billions of dollars lower than usual, and are challenging teams across JetBlue to reduce costs and improve efficiency even further."

The airline's nonunionized front-line workers will escape furloughs through "at least" Sept. 30, 2021, the memo said. The carrier will "discuss further options with your union leadership" for flight attendants and pilots and secure jobs under a second round of federal aid, if lawmakers come to an agreement. Jetblue and its pilots' union in July announced an agreement to avoid involuntary furloughs through April.

Other changes include holding off on plans to add Labor Day as a company holiday and to offer paid parental leave, which JetBlue said will instead be revisited for 2022.

"We remain committed to making these investments but they carry a significant cost and we are just not in a position financially to do it in 2021," Elliot said in the memo.

JetBlue is still planning to bring the long-range Airbus A321 plane and A220 into its fleet as well as service to London next year, the company said.

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