It feel a little like a hostage negotiation. The airline industry is looking for an additional $25 billion, on the heels of the $25 billion it already received in coronavirus aide…and, if it can’t get the money? American Airlines says it will slash 19,000 jobs.
Due to the provisions in the original aide package, the company is prohibited from firing anyone before Fall, nonetheless…it’s preparing for a much slimmer operation in response to the changing business climate. In a memo obtained by Reuters, the company’s Chief Executive Doug Parker and President Robert Isom wrote, “In short, American’s team will have at least 40,000 fewer people working October 1 than we had when we entered this pandemic.”
Delta is also announcing cuts, saying it intends to furlough 1,941 pilots. It, too, cites the fallout from Covid-19, writing in a memo, “We are six months into this pandemic and only 25% of our revenues have been recovered. Unfortunately, we see few catalysts over the next six months to meaningfully change this trajectory.”
The airline industry has suffered significantly amid the pandemic and despite $25 billion in aid from the federal government, airline still face a lack of demand.
When Does It Stop?
Before handing over more taxpayer dollars, however, the Administration needs to understand from the industry: when does it stop? Is there a risk that American Airlines threatens to come back and threaten to fire more people in January? What is really sustainable and real? The Federal Government cannot serve as an ATM for businesses that can’t be efficiently run. Let’s not kid ourselves, the airlines have never been anyone’s favorite in recent years…and it’s quite possible this is the time for them to restructure themselves in a way that forces them to treat customers better.
As for the jobs, this is partly why it’s so critical that Congress pass a meaningful stimulus package. Not one filled with industry handouts like this, but will benefits to the workers that will lose their jobs as a result of a massive shift in how we live.
It’s a struggle for the company but, taxpayers can’t keep writing the checks for industries badly in need of change even before this crisis began.