As the airline industry grapples with the health and economic consequences of COVID-19, one might be tempted to look at…
Opinion: Better to Prepare For Airline Doomsday
The airline day of reckoning is coming if everything continues on its current path. The bailout money airlines got this spring will hold them over until September 30 on the condition that payroll is maintained. Airlines, especially JetBlue and United Airlines, have become creative to find loopholes around this condition, however, for the most part, payroll has to be and is being maintained.
Recently United and Delta have made various announcements such as having thousands too many frontline staff and too many planes. Airline CEOs are starting to make public their intentions of running smaller airlines due to significantly decreased demand that many experts estimate won’t return to 2019 levels for several years.
While this is true it is likely also a scare tactic to get the government thinking about continued support for airlines. No airline really wants to go out of business, but the prospects don’t look good. People have to come to terms with reality. There is not going to be an immediate snapback and preserving current staffing levels is absurd.
2019 demand is not going to return by the time the government gravy train stops this fall. Airlines shouldn’t count on continued bailout money unless the government suddenly decides it might be worthwhile to have airlines administer unemployment benefits because that’s what these bailouts are.
United Airlines recently told staff that it has work for only roughly 3,000 of its 25,000 flight attendants for June. That’s around 22,000 flight attendants collecting paychecks for work they aren’t doing which is no fault of their own. With how demand is right now United CEO Scott Kirby said the airline plans on flying around 10 percent of its normal schedule. The math roughly works out, a little over 10 percent of United’s flight attends flying around 10 percent of the normal schedule.
While demand is hopefully going to steadily return how long is United supposed to keep all these excess flight attendants on payroll? While the number of laid-off flight attendants will be less than 22,000 and proportional to returning demand it is not an insignificant number of people that will be out of work.
It won’t just be flight attendants but pilots and corporate staff too. Both of which are expected to be cut by a third in October. Generous packages are being offered to people who will voluntarily leave but it likely won’t be enough.
Delta Air Lines announced it expects to have 7,000 more pilots than it needs for the fall, this is out of the 14,500 pilots that they have. Its CEO Ed Bastian recently said in a memo that the airline has to get smaller. The announcement about cutting pilots, making the airline smaller, and now retiring the Boeing 777 fleet is all part of the grand plan to meet that smaller airline goal. Piecemealing the news is just a way to help soften the blow when it comes.
American Airlines is mum about their staffing prospects but it’s obvious that they’re in the same boat.
There is no alternative to this. Demand isn’t going to snap back in the last quarter of 2020. Airline employees will be let go, by the tens of thousands. Unless there is a magical solution the only reasonable thing to do right now is prepare for the inevitable.
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