The largest expert travel community:
  • 772,972 Total members
  • 4,125 Users online now
  • 1,727,016 Threads
  • 31,822,095 Posts
Airlines

The CARES Act Only Covers Airline Labor Expenses Through September. What Happens After That?

The CARES Act Only Covers Airline Labor Expenses Through September. What Happens After That?
FlyerTalk

In March, Congress passed a $2.2 trillion stimulus bill that set aside $50 billion in aid to struggling U.S. airlines. If a carrier accepted the bailout, it could not furlough or lay off any workers, and had to use the money to pay employee wages and benefits. However, this provision is only valid through September 30, and there is concern that when October 1 rolls around, a third of the over 750,000 airline employees will be jobless.

20%-30% Estimated to Lose Jobs

According to Philip Baggaley, Standard and Poor’s chief credit analyst for airlines, the money obtained through the CARES Act only covers two-thirds of airline labor expenses through September. Therefore, he expects 20%-30% of airline jobs to disappear come October 1, whether it be through layoffs, buyouts, or early retirement offers.

Helane Becker, an airline analyst for Cowen, also expects a massive wave of involuntary layoffs this fall. She explained that even if the economy picks up by October, it will take years for the airline industry to get to where it was before the crisis. She said, “Ultimately, we will likely see 95,000 to 105,000 jobs lost in the U.S. airline industry.”

Potential October 1 Layoffs

Southwest CEO Gary Kelly worries about the company’s survivability through the crisis. The airline boasts it has never involuntarily laid off or furloughed any employee in its 48-year history, but its streak may come to an end this fall. Kelly said in a statement, “We have a lot of cash today, but we burned through about almost a billion dollars in the month of April as an example. So you do the math in your head and you just can’t survive that way.” He said the company is doing “everything that we can to preserve jobs,” but also noted that the stimulus money would not cover all employee wage expenses through September.

Scott Kirby, United Airlines’ President and soon to be CEO, said the airline would be making hard decisions if things do not start looking up this fall. He explained, “Our schedule is down 90%. And we plan for it to stay at that level until we begin to see demand recover. If demand remains significantly diminished on October 1, we simply won’t be able to endure this crisis as a company without implementing some of the more difficult and painful actions. These include decisions on involuntary furloughs, further reductions in hours, as well as other actions that will have an immediate impact on our people and their livelihood.”

Earlier this week, United told its 11,500 nonunion employees that it plans to cut at least 30% of its staff come October 1. The company has also required each employee to take 20 unpaid days off by September 30. JetBlue has also taken similar measures, ordering its nonunion employees to take 24 days off by September 30. Both airlines explain that the days off equate to reduced hours, which is allowed under the bill.

View Comments (6)

6 Comments

  1. El Puerco Volante

    May 20, 2020 at 6:56 am

    Who CARES? US taxpayers will keep funding their airlines, no matter what

  2. arcticflier

    May 20, 2020 at 9:57 am

    There are no guarantees in life.

    Perhaps those employees should start looking for other employment like the rest of us.

  3. rylan

    May 20, 2020 at 1:27 pm

    Problem is there aren’t going to be jobs for them to find elsewhere. The service industry in general is going to be bad for a while. And where are all of those pilots going to go? Remember we were just recently in a shortage of pilots and people were joining the industry… now many won’t have jobs.

  4. FlyingNone

    May 20, 2020 at 8:25 pm

    Kiplinger (today) wrote these companies are hiring:
    Walgreens,
    Walmart,
    Valet Living (janitorial, deliveries and pet walking services for apartment complexes)
    Grocery Stores
    Lowes
    Rite Aid
    Target
    7-11
    Dollar Tree
    Ace Hardware
    CVS
    Dominos Pizza
    Pizza Hut
    Door Dash, Instacart, Shipt, etc
    and let’s not forget Amazon

    I’m sure people in the $30-$35/ or more an hour wage will be so eager to work for these companies – all of them with disgruntled employees, low wages, no job security and no benefits. After all, aren’t all the TV talking heads assuring everyone (heard it many times already)…..’It’s okay to go out of your skillset”….. Like someone making a decent, livable wage is going to work for Dollar Tree at $8.00/hour because some Psychology major working in HR says “it’s okay”.

  5. arcticflier

    May 22, 2020 at 5:24 am

    Yes, and don’t forget about GrubHub type delivery services, after all, pilots are basically in the profession of “delivery” already, and would be a natural “fit”.

  6. Spanish

    Spanish

    May 26, 2020 at 4:54 am

    Couldn’t agree more with FlyingNone. The jobs out there aren’t good ones…

You must be logged in on the FORUM to post a comment Login

Leave a Reply

Airlines

More in Airlines

Air India Will Begin Booking Domestic Flights on May 25th

FlyerTalkMay 25, 2020

Southwest Airlines Will Survive the Coronavirus

FlyerTalkMay 25, 2020
martinique airport

Need to Cancel or Change a Non-Refundable Ticket? This Is Your Best Bet

Mariel LovelandMay 22, 2020

Copyright © 2014 Top News Theme. Theme by MVP Themes, powered by Wordpress.

SIGN UP FOR FLYERTALK TIPS & NEWS


I want emails from FlyerTalk with travel information and promotions. I can unsubscribe any time using the unsubscribe link at the end of all emails