I Can’t Believe What’s About to Happen at United Airlines and American Airlines on October 1

I Can't Believe What's About to Happen at United Airlines and American Airlines on October 1



I never thought this could happen to United Airlines and American Airlines.

In July, United Airlines warned that nearly half its workforce — that’s 36,000 employees — could be out of a job on October 1. 

American Airlines made a similar announcement soon after, warning that 25,000 employees risked losing their jobs the same day.

But I thought at the time that these were probably just warnings of things that would likely never actually come to pass — ironically less likely to happen, in fact, because the airlines were warning about them.

Why? Because the strategically timed announcements were designed to try to get the U.S. government to pass a second stimulus bill, including billions of dollars for the airlines to keep their employees working.

Since the government had already passed one stimulus bill earlier this year — which contained a provision that said the airlines had to promise not to lay off any employees until October 1 in return for the bailout; hence the magic of that date — a second bill just seemed likely.

But a couple things happened on the way to the Capitol. One of them was predicable in retrospect: a traditional political fight. 

It’s an election year (perhaps the most contentious election year in living memory), and getting agreement between the House (controlled by Democrats) and the Senate (controlled by Republicans) is a heavy lift, to put it lightly.

Now, as the critical date approaches, there’s another issue: the death of Supreme Court Justice Ruth Ginsburg, and the nomination and confirmation of her successor, which President Trump and Republicans in the Senate have made their top priority.

There are only so many days on the calendar, and only so many hours in the day.

Despite the fact that the House passed a second stimulus bill back in May, compromise talks broke down over the summer. And if both sides assumed there would be a chance to reach a last-minute agreement, there are suddenly a lot fewer legislative minutes before October 1.

There is some tempered good news, in that more recently, American and United have said that their layoff and furlough numbers are smaller than they might have been, due to some employees’ voluntary departures.

But American still anticipates 19,000 workers will lose their jobs, and United says its number would be 16,370, with flight attendants reportedly making up the biggest part of the cuts.

“Without action they’re going to be furloughed on October 1 and it’s not fair,” American Airlines CEO Doug Parker said at a press conference this week. He added that American might wind up discontinuing air service to some smaller cities like New Haven, Connecticut and Dubuque, Iowa as well.

Separately, Delta Air Lines has said it anticipates it may have to furlough about 220 pilots in November. JetBlue executives say they’re anticipating layoffs too, although I haven’t seen an updated numerical estimate. 

“Unfortunately, the dynamic in Washington, DC has really created an environment where our hopes are still there, [but] it’s not looking as positive as it was its going to be,” said JetBlue president and chief operating officer Joanna Geraghty.

The way at least some of the United and American job cuts are structured, some employees would continue to get health insurance through their employers, and they could be recalled for duty with 14 days notice. 

But at the same time, passenger volume is down 65 percent, and the airlines taken together are reportedly losing $5 billion each month.

At United, CEO Scott Kirby predicted his airline will stay below half its size for another 15 months at least, and won’t start rebounding until there’s a widespread and effective vaccine (which he doesn’t think will happen until the end of 2021).

Now, in normal circumstances, one might expect that the danger of 36,000 people losing their jobs just before an election might prompt action in government.

But the past year has been anything but normal. And the fact that roughly 900,000 people have been filing weekly for unemployment insurance makes that otherwise large number seem less significant.

Anyway, it’s not for me to take a position here on whether Washington should pass another law helping the industry. I certainly feel empathy for any of the people at risk of losing their jobs, of course. 

But as a business owner, I think you’ll find it intriguing and ironic. The most effective way to prompt a bailout and stop from having to furlough so many employees, might actually be to keep announcing that you’re going to have to do it.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.





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PAUL WALKER

PAUL WALKER

Lonely traveler, l like to explore with my camera and my laptop every part of the earth.