Aid enables US carriers to start recalling staff – for now

Major airlines in the United States have said they are better prepared to face a year ahead that could be as grim as 2020, now that they have won USD15 billion in additional payroll support in the latest coronavirus relief package signed into law at the end of December. Some have begun a phased return of furloughed workers but warned this was likely to be temporary. Part of a new USD900 billion coronavirus relief package, the “transportation aid” requires carriers to keep employees on the workforce until March 31 and bring back over 30,000 workers who were furloughed when the terms of a previous package, which handed airlines USD25 billion, expired on October 1. Delta Air Lines (DL, Atlanta Hartsfield Jackson) CEO Ed Bastian said in a memo sent to employees on January 1 that he continued to anticipate a positive cash flow by spring 2021, after which it would start to pay down its debt. However, he added, as quoted by Reuters: “As difficult as 2020 was, in many ways I expect the next 12 months to be even more challenging.” The company, which has pledged to block middle seats at least until the end of March, is likely to “experience two distinct phases during the next 12 months,” the first a continuation of 2020, while “the second phase will begin only when we reach a turning point with widely available vaccinations that spur a significant return to travel, particularly business travel.” Southwest Airlines (WN, Dallas Love Field) was more upbeat, saying that the new federal Payroll Support Program (PSP) meant it would halt planned job and salary cuts. It had plotted almost 7,300 job cuts starting in January to cut labour costs by USD500 million. It may receive USD2 billion from the new package, according to an estimate by Bloomberg. CEO Gary Kelly said in a memo to staff: “Thankfully, as a result of this crucial aid, we can breathe a sigh of relief, knowing that we will not be forced to follow through with those steps.” The aid will prevent job cuts for the whole of 2021, he promised, though the carrier remains overstaffed in “many areas”. Overall traffic volumes in the United States are still only about 35% of what they were in 2019. According to lobby group Airlines for America, US carriers were burning USD180 million per day as of mid-December. Carriers including American Airlines (AA, Dallas/Fort Worth) and United Airlines (UA, Chicago O’Hare) laid off about 32,000 employees in October when the previous aid package lapsed. They are now expected to be called back. American claimed to have sent recall letters to all 17,500 furloughed union employees, the Dallas Morning News reported. As the bill covers four months from December 1, some may also receive back pay.