Airline workers might not be cut but in coronavirus travel collapse their paychecks will be smaller
- Delta is cutting thousands of employee hours by 25% in a bid to save money as coronavirus sinks travel demand.
- Unionized flight attendants and pilots say those employees have contracts that mean they have minimum pay, even though actual flying might be less.
- Airlines won $25 billion in grants in the $2 trillion coronavirus aid bill if they commit to not furlough employees through Sept. 30.
Employees of airlines struggling with a record plunge in demand won a reprieve in the $2 trillion coronavirus bill: U.S. airlines could receive $25 billion in grants in exchange for keeping them in their jobs through the end of September.
But employees from ground workers to flight attendants are going to be working fewer hours, meaning smaller checks than usual as airlines slash flights and park hundreds of planes to mirror the record drop in ticket sales.
Delta Air Lines is cutting the workweeks of more than 40,000 employees to three and four days from April through the end of June. The Atlanta-based carrier estimates that measure will reduce payroll expenses by 25% over the next 90 days. (Hourly employees in the airline's reservations and customer service centers as well as in its operations hub are not included.)
More than 21,000 Delta employees have volunteered for unpaid leave of various lengths, nearly a quarter of the full-time-equivalent employees the airline had at the end of the year.
"We could use more volunteers," CEO Ed Bastian told employees in a memo Friday.
The coronavirus aid bill, which President Donald Trump signed Friday, states that airlines that accept the aid must "refrain from conducting involuntary furloughs or reducing pay rates and benefits until September 30, 2020."
So while hourly rates aren't declining, the amount of work available, is declining. In addition to asking employees to take unpaid leave, airlines are parking thousands of planes, deferring aircraft orders and drawing down on credit lines to shore up cash. Executives are reviewing the details in the aid package and the strings attached to accepting it.
Delta's flight attendants aren't unionized. Those that are, such as those at American and United, as well as union pilots have pay protections in their contracts for a minimum number of hours they can be paid each month.
American reduced its capacity by about 60% in April and by 80% in May "in light of the record low demand," CEO Doug Parker told employees in a video message last Thursday.
"While the lack of furloughs would keep our full team employed with full benefits in the crisis there are going to be fewer hours available to work for many of our team members," said Parker. "Many groups will be at minimum paid hours for the next few months." Parker said the airline is examining the terms of the aid but that the carrier could receive about $12 billion.
American pilots for example, have minimums of about 75 paid hours, according to Dennis Tajer, a Boeing 737 captain and spokesman for the Allied Pilots Association, which represents about 15,000 American Airlines pilots. while in a normal operation pilots would be working close to 90 hours. The crisis hit just as airlines were gearing up for another strong summer, the peak of travel demand.
"We went from the best of times to the worst of times overnight," Tajer said.
U.S. airlines had just posted their 10th consecutive year of profits in 2019.
Airline executives have warned employees in recent days that they expect a long-lasting slump in demand as the economic impact from the coronavirus becomes clearer. The downturn has required airlines to shrink.
United's CEO, Oscar Munoz, and its president, Scott Kirby, who takes over as CEO in May, told employees on Friday that they expect demand to remain week for months and possibly into next year.
"We will continue to plan for the worst and hope for a faster recovery but no matter what happens, taking care of each of our people will remain our number one priority," they said in a note to employees. "That means being honest, fair and upfront with you: if the recovery is as slow as we fear, it means our airline and our workforce will have to be smaller than it is today."