U.S. airlines said they will begin furloughing tens of thousands of employees on Thursday after congressional leaders and the Trump administration failed to reach a deal on a coronavirus relief package.
In making the announcements late Wednesday, the carriers left open the possibility that workers could be called back if a deal is reached in the next few days.
American Airlines was the first to announce its plans, saying it would begin furloughing 19,000 employees. American Chief Executive Doug Parker said in a letter to employees that he spoke with Treasury Secretary Steven Mnuchin late Wednesday about the status of his negotiations with House Speaker Nancy Pelosi, D-Calif., but came away with no guarantee a deal would be reached.
Parker wrote the airline had to begin the furloughs, but that he committed to Mnuchin that he would recall employees if a deal is reached.
“I am extremely sorry we have reached this outcome,” Parker said in the letter. “It is not what you all deserve.”
Parker wrote that he would continue to advocate for help and urged his colleagues to do the same.
“We are not done fighting,” he said.
A similar message came from United, which said it will be forced to furlough roughly 13,000 of its employees starting Thursday.
“While sadly, involuntary furloughs begin today, we haven’t given up,” the airline said in a statement. “In a continuing effort to give the federal government every opportunity to act, we have made clear to leadership in the Administration, Congress and among our union partners that we can and will reverse the furlough process if the CARES Act Payroll Support Program is extended in the next few days. We implore our elected leaders to reach a compromise, get a deal done now, and save jobs.”
In March, with the airlines on the brink of collapse, Congress passed a $25 billion program to help cover their payroll costs on the condition that workers not be laid off or have their pay cut before Oct. 1. But those protections expire Thursday, freeing the airlines to move forward with cuts. Since the summer, airline unions, joined by company executives, have been pushing for a second round of aid.
Sara Nelson, president of the Association of Flight Attendants, said the furloughs mean “tens of thousands of essential aviation workers will wake up without a job or health care and tens of thousands more will be without a paycheck.”
“It shouldn’t be this hard to do the right thing,” Nelson said in a statement.
The virus has laid low the airline industry in ways even the Sept. 11, 2001 terrorist attacks and the 2008 financial crisis did not. Passenger numbers plunged 90% or more in April and May, and have only recovered to about a third of normal levels.
Airline leaders say the job cuts are unavoidable as their planes carry few passengers and they burn through $5 billion a month, and the nation is still beset by a virus that lawmakers expected would largely be under control by now.
With a hard deadline on the calendar, aviation union leaders pressured Congress to once again take up relief talks with the Trump administration. Strong bipartisan support for an extension of the aid, known as the Payroll Support Program, emerged by the first week of August.
But help for the airlines has been bound up in the contentious politics of securing a broader coronavirus relief package.
The negotiations came down to the final days before the Oct. 1 deadline, while some 33,000 anxious front line workers waited to see whether they would still have a job come the end of the week.
On Monday, House Democrats unveiled a $2.2 trillion package of coronavirus relief, that included a six-month extension of the airline fund. Pelosi and Mnuchin scheduled to meet Wednesday afternoon. And in an interview on CNN in the morning, American’s Parker held open the door to delaying the furloughs.
“Certainly if there’s a clear and concrete path, that’s we’re not quite done yet but we will be done soon, of course,” he said.
Union leaders also continued their campaign into the final hours before the deadline.
In a letter to lawmakers Wednesday morning, the International Association of Machinists and Aerospace Workers urged Congress to pass a comprehensive virus relief bill.
“A swift extension of the PSP program is absolutely necessary to avoid mass layoffs in the air travel industry,” union president President Robert Martinez Jr. wrote.
In the early afternoon, Nicholas Calio, chief executive of trade group Airlines for America, issued a statement saying, “To be absolutely clear, furloughs are inevitable without a PSP extension. All of which says to Congress and the Administration: ACT TODAY!”
Regular workers joined the push, too, calling lawmakers and urging them to help them on social media.
If it had been a normal day—at least as normal as it gets in the midst of a global pandemic—Allie Malis, an American Airlines flight attendant would have just touched down at Reagan National Airport after working a flight from Chicago.
Instead, there were morning check-ins with other aviation unions and American’s own government affairs team on the current status of a possible deal. That was followed by emails to Hill staffers, then calls to dozens of lawmakers to convince them that time was running out to make a deal to save the jobs of more than 33,000 other airline workers.
“When I say tomorrow I will be unemployed, it is not hypothetical,” said Malis, 30, who has worked for American for six years. “We’re here on the edge of this. I feel like I’m standing with my toes off a cliff and leaning into the unknown.”
By late afternoon, Mnuchin and Pelosi had ended their meeting without an agreement.
“Our conversations will continue,” Pelosi said.
The airline furloughs have loomed since midsummer, when it became clear that demand for flights was not bouncing back quickly and airlines began to send legally required notices to workers 60 days before cutting their jobs.
Initial figures for how many people would be out of a job were as high as 70,000 people—United Airlines warned on July 8 that it could furlough 40 percent of its entire staff.
The total has come down in the intervening weeks.
On Monday, pilots at United agreed to a deal that would stave off 2,800 furloughs until June 2021. In exchange, they agreed to pay cuts and a round of early retirements.
But even with that deal in place, 12,000 or so jobs at the airline and another 19,000 at American remain at risk.
Southwest Airlines and Delta Air Lines, the nation’s two other major carriers, have found ways to avoid furloughs, largely by convincing tens of thousands of employees to voluntarily take unpaid leave or separation deals.
While there is broad political support for extending the payroll program, it’s not clear that in six months time the airline industry will be in significantly better shape. Analysts expect that a complete will recovery will take years, rather than months.
On Tuesday, the International Air Transport Association downgraded its forecast for the years’ traffic level.
“The near-term industry outlook has actually gotten darker, something I would not have believed possible just a few months ago,” said Alexandre de Juniac, the group’s chief executive.
A weaker than expected summer won’t help propel airlines through the normally quieter winter months as it normally does, de Juniac said.
But Airline leaders in the United States have argued that without the government money, they will struggle to add flights as demand grows, hampering the overall economic recovery. In a sign of how weakened the broader travel industry remains, Disney announced Tuesday that it would lay off 28,000 people who work in its theme-park division.
And in the CNN interview Wednesday, Parker said that with the aid American could expect to be in a position to keep workers on the job come March.
“We don’t need full recovery of demand,” he said.