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American And United Airlines Announce Layoffs As Federal Payroll Support Runs Out

TONYA MOSLEY, HOST:

Big layoffs today at two of the nation's biggest airlines. American and United are notifying 32,000 employees that they are being furloughed as federal payroll support runs out. Congress and the White House appear to be inching closer to an agreement on another massive pandemic relief package, but as NPR's David Schaper reports, the airlines say they needed it yesterday.

DAVID SCHAPER, BYLINE: Airline passenger traffic is down close to 70% since the start of the pandemic. And with fewer people flying, airlines are hemorrhaging tens of millions of dollars a day. The CARES Act gave them $25 billion in direct payroll support, allowing them to pay employees through September 30. That was yesterday. Today...

SARA NELSON: People are devastated.

SCHAPER: Sara Nelson heads the Association of Flight Attendants, the largest flight attendants union.

NELSON: They're looking at not having a paycheck to pay rent. They're looking at not having health care. In some cases, we've got two aviation workers who are both on the furlough list, who live in the same home, spouses and partners and kids who count on them.

SCHAPER: Both United and American say they'll recall workers if Congress provides more relief money soon. Other airlines, including Delta and Southwest, say they had enough employees take early retirement or incentives to leave, so they won't need to furlough workers right now, but they could in a couple of months. Nelson says the White House and most in Congress support extending airline aid for another six months.

NELSON: We have a very reasonable solution that has been a good use of the public's money, has been recognized as money well spent, keeping people in their jobs, keeping critical infrastructure going for our country to keep our country connected, keeping that service to all of our communities.

SCHAPER: Even with the huge decline in air travel, one reason the airlines say they need to keep employees working is to be ready to ramp up when there's a recovery. Nick Calio heads the industry group Airlines for America.

NICK CALIO: Our pilots, our flight attendants, our machinists all have to be certified and trained on a regular basis. So you can't take them off the job for two or three months and throw them the keys to the airplane and say, start it up, and let's get it going again. That's just not the way it works.

SCHAPER: But not everyone agrees that billions more in taxpayer money for the airlines is a good idea.

VERONIQUE DE RUGY: Propping up employees and the industry exactly like it was pre-pandemic when the demand isn't there is only postponing the inevitable.

SCHAPER: Veronique de Rugy is an economist and senior fellow at George Mason University.

DE RUGY: They got that money. They did the bare minimum that they needed to do. They basically did not adjust their workforce and their payroll to the new reality.

SCHAPER: De Rugy says air travel may never fully recover, and the airlines should restructure now. But Helane Becker, an aviation industry analyst with investment bank Cowen, predicts demand for air travel will bounce back.

HELANE BECKER: It's clear that people want to go places. They're tired of being home, not traveling.

SCHAPER: And Becker says business travelers in particular, the most profitable for the airlines, will eventually fly again.

BECKER: People are tired of sitting in front of their computers, doing the Zoom meetings and GoToMeeting and webinars. And I think they want to see people in person.

SCHAPER: But Becker sees most companies as still not yet ready to bring employees back to the office, let alone put them on planes. When they do, with additional federal money or not, it may be a long time before any major airline is turning a profit again. David Schaper, NPR News.

(SOUNDBITE OF MUSIC) Transcript provided by NPR, Copyright NPR.

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