With the coronavirus/” target=”_self” rel=”nofollow noopener noreferrer”>COVID-19 pandemic stunting travel, some airlines have been receiving private funding packages to keep afloat. However, Southwest Airlines has recently offered voluntary leave with partial pay to flight attendants, despite the U.S. Senate approving a $50 billion stimulus package for the industry this past Wednesday.
By accepting federal aid, airlines must agree to several conditions, which include restrictions on dividends and share buybacks, requirements to keep employment levels stable through September and limits on executive pay. Two national unions believe that Southwest may reject any stimulus package due to these conditions.
The airline offered flight attendants voluntary paid time off for May and June at “50 percent of the minimum line value.” While the offer protects benefits, flight attendants would still need to complete paid training requirements.
Southwest flight attendants have been advised by Transport Workers Union Local 556 not to accept voluntary leave, as the congressional approval could guarantee full pay through any upcoming travel bans.
“The company created this emergency time off program blindly, quickly, and with complete disregard for what is being negotiated and approved by Congress,” TWU Local 556 said in a letter to members. “Southwest Airlines also claims that they ‘retain the right to reject government funding and the strings that come with it.’”
According to the Dallas Morning News, Southwest’s CEO Gary Kelly spent weeks in Washington advocating for the stimulus package, confident that the bill will help the airline avoid layoffs. However, Southwest has made little mention of the bill since senators closed the deal over the weekend.
In the version of the bill passed by the Senate Wednesday night, airlines would receive $25 billion in loans and $25 billion in grants for “the continuation of payment of employee wages, salaries, and benefits.”
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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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