Despite steadily rising production costs, higher market returns have offset an increased cost base and…
If nothing changes soon, October will be a brutal month for airline workers. The airline industry has been hit hard by the effects of Covid-19. The federal government has warned people not to take unnecessary flights and has banned travel to and from certain countries. Passengers were afraid to fly and canceled their trips and vacations for fear of catching the disease. Professionals accustomed to taking flights to meet clients have played it safe by arranging Zoom calls instead.
As air travel came to a screeching halt, the revenues and profits of major airlines plummeted. There was little choice for the airlines but to downsize, as there was no demand to fly. Two large companies in the sector, American Airlines and Delta Air Lines, have announced to their respective employees that there will be massive layoffs in October. Over the past three months, worries and fears over potential downsizing have prompted more than 43,000 airline employees to post their resumes on Indeed, the world’s largest hub for jobs and bases. resume data.
The major US airlines were in such dire financial straits that they had to be bailed out by US taxpayers. The airlines have collectively accepted about $ 25 billion from the government, as part of its multibillion-dollar stimulus package. The deal required airlines to retain employees until at least September 30. This is why we are starting to see announcements of layoffs, as the restriction will be lifted soon.
In July, American Airlines made a disastrous announcement warning 25,000 workers they could be laid off or laid off. This represented about 20% of the company’s workforce. The airline’s post echoes grim news from rival United Airlines that around 36,000 employees could be put on leave from October 1. About 100,000 jobs have already been lost in the airline industry.
The current outlook for air travel is still uncertain as there is concern over a second wave of Covid-19. With a large majority of people working from home and connecting with colleagues and clients, through technologies like Zoom, Slack and other online methods, travel is unlikely to resume to pre-Covid-19 levels. anytime soon.
Airlines executives have lobbied and lobbied the government for a new round of financial support to help them get through this difficult time. American Airlines executives blamed the government and told their employees, “We need to prepare for the possibility that the leaders of our country will not be able to find a way to further support airline professionals. aviation and the service we provide, especially to small communities. ”
Executives urged their employees to reach out to politicians and ask them for help with additional financial assistance. “What Congress and the administration did in March was a remarkable effort to save the US economy and aviation,” said Scott Kirby, chief executive of United Airlines. His airline, which employs 79,000 people, received $ 5 billion in the first coronavirus relief program. Kirby and other airline CEOs have encouraged their workers to reach out to their representatives in Congress to seek financial help as part of another round of stimulus funding. So far, Congress has made no offer of assistance.
Unions including the Association of Flight Attendants, the Allied Pilots Association, the Teamsters, the International Association of Machinists and others joined with business leaders in calling on Congress to support a second round of plans rescue package for the airline industry.
The timing is not right for the airlines. Congress and politicians are focused on the upcoming presidential election and the seat of Supreme Court Justice Ruth Bader Ginsburg, who died on September 18.
Part of this disaster could have been avoided. Many airlines got involved in financial actions, which made their problems worse. For example, United Airlines self-harm is lost in the conversation. From 2014 to 2019, the company spent about $ 8.57 billion on share buybacks, which is about 80% of its available cash, buying back its shares. These funds could have been set aside for a rainy day.
It also didn’t help the things the airline lavished generous compensation on its executives. United Airlines CEO Oscar Munoz earned approximately $ 12,643,005 for 2019 and Chairman J. Scott Kirby received $ 16,779,485 for 2019. Other senior executives, such as CFO, chief executive officer the operation and general manager, also earned millions.
It appears that the money allocated for share buybacks, dividends and excessive executive compensation could have been earmarked for future contingency plans. Some of this largesse could have been reallocated to save a lot of jobs.
Sadly, a combination of the virus outbreak, a black swan event, coupled with questionable financial decisions (by airline executives) are now putting tens of thousands of workers at risk of losing their jobs. during one of the worst job markets since The Great Depression.