When President Trump signed the CARES Act into law on March 27, provisions were written into the stimulus package that specifically prohibited airlines – recipients of $58 billion in grants and loans – from reducing their respective workforces for six months until Sept. 30, 2020.
Apparently, that might not include reducing hours and pay.
In an in-depth story coronavirus-2020-3″ target=”_blank” rel=”nofollow noopener noreferrer”>by David Slotnick of Business Insider, airline employees at major US carriers including Delta, United, American and Southwest are slowly learning that they might not receive their usual full salaries.
With coronavirus-will-cause-major-air-travel-demand-decrease.html” target=”_self” rel=”nofollow noopener noreferrer”>demand for air travel drastically reduced in the wake of the coronavirus global pandemic – the Transportation Security Administration reported that only 185,000 passengers flew on U.S. airlines on Saturday, March 28 compared to 2.1 million a year ago – carriers are trimming hours, and therefore pay, for some employees.
Business Insider obtained two leaked memos from Delta CEO Ed Bastian written to employees outlining the plan.
Days before the signing of the stimulus package, Bastian wrote that “Given the large proportion of the fleet and schedule that we’ve been forced to pull down, there is substantially less work at present for our people to do. With that in mind, it is our responsibility to protect Delta, and we are taking additional temporary steps to preserve cash to help us through this crisis.”
After the President signed the bill into law on March 27, Bastian sent another memo on the same day saying that cuts would still be coming – even though $29 billion of the bailout came in the form of grants that were supposed to protect job security.
The bill, he wrote, was just “one of several steps that we have outlined over the past two weeks designed to protect jobs and our airline. Those include the cash raised in the financial markets; salary reductions for officers and directors; voluntary leaves; reduction in work hours as we substantially downsize our operation; and expense reductions that come from consolidating airport facilities, closing many Delta Sky Clubs, deferring nonessential maintenance and pausing all nonessential capital projects.”
“I know that a temporary reduction in work hours as we shrink the operation is difficult,” Bastian added. “But at Delta we’ve always shared our success, and we stand together to face our challenges as well. This shared sacrifice protects everyone’s jobs and helps ensure that we’ll keep climbing, together, when the crisis passes and we begin our recovery.”
One Delta employee told Business Insider that the reduction in hours was mandatory. Unlike at other airlines, most of Delta’s employees are not represented by collective bargaining agreements, and consequently do not have minimum work-hour entitlements.
At United Airlines, Business Insider noted that with the reduction in flights, pilots and flight attendants who are normally only paid for their time in the air will see a 25-to-30 percent reduction in hours and pay. A United executive told the media outlet that flight attendants will be paid for the minimum number of monthly work hours they’re entitled to receive under their union contract.
According to an official from the Association of Flight Attendants union, that means 71-78 hours depending on how each flight attendant’s schedule is normally structured when they normally work 85-110 flight hours.
TravelPulse reached out to a couple of pilots for their experience. One works for Delta, the other for United.
Both wished to remain anonymous for fear of repercussion, but each confirmed their hours and pay are being cut in April.
“I’m just sitting at home waiting to see how it shakes out right now, but it doesn’t look good,” the Delta pilot said.
The United pilot called it a “bad situation.” But he did confirm he accepted a pay cut knowing it meant his fellow colleagues wouldn’t completely lose their jobs.
Comments & Discussion
New United CEO Scott Kirby Comes Out Firing
United Airlines’ Scott Kirby, who took over as CEO last week in the wake of Oscar Munoz’s retirement, is wasting no time establishing his authority.
Kirby cut 13 high-level executives in a cash-saving move on Friday as the coronavirus pandemic has throttled the industry financially. A day earlier, he told an online investor conference that the airline absolutely would not declare bankruptcy, and that he thought flying was safe enough to not block the middle seats on planes from being sold.
Well, he did build a reputation as an open – some might say abrasive – executive while at American Airlines.
Kirby is eliminating 13 of United’s 67 officer positions, all effective on Oct. 1. That’s the day after the restrictions on firing employees runs out per the federal government’s rules for airlines accepting billions of dollars in stimulus package grants and loans.
“While there are glimmers of good news in our July schedule — we expect to be down about 75% versus 90% right now — travel demand is still a very long way from where it was at the end of last year and the financial impact on our business remains severe,” United said in a written statement as reported by CNBC.
The cuts are in response to the loss of nearly 90 percent of business for United and all airlines, as the demand for travel has dropped dramatically compared to last year and beyond.
But Kirby defiantly said during the investor conference a day before that he has no plans for the airline to go bankrupt.
“Zero percent, no chance,” Kirby said. “It’s worse for shareholders. It’s worse for creditors. It’s worse for employees. It’s worse for every constituent that we have.”
To that end, Kirby also said he won’t sacrifice potential sales by blocking middle seats, as some airlines have done. As the blog The Points Guy noted, Kirby said the airline’s cleaning process, air circulation and a requirement for passengers and crew to wear face masks make it a safe experience.
“Airplanes don’t have social distancing — we’re not going to be six feet apart,” he said. “But an airplane environment is incredibly safe.”
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