Leaked memo from Delta reveals plans to cut worker hours and pay

Despite the payroll grants offered to airlines in the coronavirus stimulus package, airline workers at Delta, American, United, Southwest, and others will, in practice, take home less money than they had before.

While the CARES Act says that airlines accepting aid cannot reduce workforces before September 30, 2020, a reduction of travel demand and flying means that many employees will have their hours cut or be paid minimum contractual amounts.

While some employees are protected by the minimum duty hours outlined in their employment contracts, other workers Business Insider spoke to are frustrated and equated the cuts to a furlough.

Airline workers at major US carriers including Delta, United, and American are having their hours and pay reduced, despite provisions in the coronavirus bailout package that protect against layoffs and furloughs.

The Coronavirus Aid, Relief, and Economic Security Act, or “CARES” Act – offered $58 billion in aid to airlines, split into two parts. Up to $29 billion in loans for air carriers is available, and an additional $29 billion in payroll grants.

Those grants are intended to help workers at struggling airlines, distributed by the federal government to the carriers, and disbursed to employees using regular payroll systems.

Both the loans and the grants mandate that companies accepting them not reduce workforces until after September 30, 2020 – in effect, the mandate prohibits involuntary job cuts.

However, airline workers are learning that despite the protections, many of them may not be earning their usual full salaries in the coming months.

Pilots and flight attendants are typically paid based on how much time they fly – with exceptions, they aren’t paid full salaries for time on the ground, whether that’s during boarding, or spent on waiting for an assigned flight.

With airlines canceling flights, crew employees are unlikely to be able to get their normal number of flight hours for the coming months – a process known as bidding. For those employees, that could mean different things.

At United, flight attendants will be paid for the minimum number of monthly work hours they’re entitled to receive under their union contract, a senior executive at United said on Friday. According to an official from the Association of Flight Attendants union, that means 71-78 hours at United, depending on how each flight attendant’s schedule is normally structured. During a typical month, flight attendants will work 85-110 flight hours, and sometimes pick up additional trips, the union official said.

That equates to a roughly 20-35% drop in take-home pay, depending on how many hours the flight attendants normally work.

Similar hours reduction and pay cuts to match contractual minimums are expected among the airline’s other employees, too.

At Delta, some employees were told their normal workweeks would be cut from five days to three or four. In a memo sent to employees on Tuesday, March 24, before the stimulus bill was passed, and seen by Business Insider, CEO Ed Bastian asked ground-based employees to take the reduction in hours.

“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,” Bastian said in the memo. “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.”

In a follow-up memo sent on Friday, March 27, after the bill was signed into law, Bastian outlined that even with the bailout, cuts would still be required.

The bill “is one of several steps that we have outlined over the past two weeks designed to protect jobs and our airline,” he wrote. “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.”

Numerous employees, in messages sent to this reporter, and in posts in public and private social media groups seen by Business Insider, expressed frustration with the cuts, partly as 21,000 of Delta’s 90,000 employees have taken voluntary short-term, unpaid leaves.

One employee said that despite the reduction in hours being framed as voluntary in Bastian’s message, they were told by their manager it was mandatory. Others described the cuts as effectively the same as furloughs, despite the bill requiring no reduction of workforce. 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.

“So what Ed Bastian is doing is accepting the government grants to help cover payroll but still making workers reduce hours,” one ground worker for the airline told Business Insider. “It is a typical Bastian move where he sells it to employees as taking a reduction to help Delta in its time of need.”

Delta did not immediately respond to a request for comment.

At American Airlines, workers are expecting a similar arrangement to United.

“We have a contractual minimum they would have to pay each flight attendant,” one employee told Business Insider. “They’re continuing to offer early retirements and leaves, too.”

A ground manager for the airline said his schedule had not been affected yet and said that while it could change, he still had a normal work month lined up for April.

A pilot for Southwest said the airline offered similar minimum duty hours. Flight crews have had trouble reaching the minimum number of hours even before the coronavirus crisis, due to the ongoing 737 Max grounding, so minimums have been paid in past months.

The pilot said that the job insecurity associated with the coronavirus crisis had the potential to be devastating.

“These are good, well paying, middle-class jobs and, at least for those in their 40s and 50s, this is the second or third time in a career they’ve been in serious jeopardy,” he said. “Of course that’s all meaningless compared to the people who are getting sick and dying, but it’s just another part of this situation we all find ourselves in.”

Despite the job protections in the stimulus package, and even with reduced pay and employees taking unpaid leaves, jobs will still be at risk in the fall if the coronavirus continues to spread, as predicted, which would continue the trend of lower demand for air travel.

In a candid letter to staff sent on Friday, United CEO Oscar Munoz and President Scott Kirby warned that, based on how the virus is expected to spread and the predicted impact on the economy, staff reductions will likely be necessary after September 30. www.yahoo.com