US airlines are in the process of getting $50 billion in aid from the government. One of the conditions of accepting that aid is that they have to promise not to lay off any employees through at least September 30, 2020.
Therefore the goal for airlines right now is to get employees to voluntarily take leave, because with virtually non-existent demand, they only need a small fraction of their current workforce.
Contention at American over paid vs. unpaid leave
A couple of weeks ago I wrote about the rather generous offer that American Airlines made available to pilots in order to reduce their payroll. Pilots had access to two opportunities:
- Voluntary Short-Term Leave of Absence — pilots can take advantage of one month, three month, or six month options, during which they’ll be paid for 55 hours per month of flying; pilots will still accrue sick leave, vacation time, and seniority
- Voluntary Permanent Leave of Absence — pilots who are 62 or older can choose to essentially retire early, and they’ll be paid for 50 hours of flying per month until the mandatory retirement age of 65
Pilots are otherwise typically guaranteed at least 73 hours per month of flying, meaning that pilots accepting this would be getting 60-70% of their normal salary.
American Airlines flight attendants were unhappy that pilots were being offered paid leave options, while their only option was a voluntary unpaid leave. That has finally changed.
American now offering all employees paid leave
American Airlines has now extended both paid leave and paid early out options for most employee groups. Very broadly, here’s what this includes:
- Employees accepting an early out will receive roughly 50% of their regular minimum pay for a period of one year, and will receive up to 30 months of medical coverage, in addition to travel benefits
- Employees accepting a leave of absence will receive roughly 25% of their regular minimum pay for the period of their leave, and will maintain medical coverage and travel benefits
Both of these options are much better than what was previously available to employee groups (outside of pilots), and it will be interesting to see how many employees take advantage of this.
Interestingly Delta isn’t offering paid leave options
Delta is known for having by far the best employee relations among the “big three” US carriers. That’s why it’s worth noting that Delta has gotten at least 21,000 employees to volunteer for unpaid leave of various lengths, which represents nearly a quarter of their workforce.
This is obviously a positive reflection of the relationship Delta has with their employees, and that they are working towards a common goal.
At the same time, I can’t help but wonder if Delta employees will be unhappy about the fact that American is granting all levels of employees paid leave, while they’re not getting paid for this.
Bottom line
Airlines have way more employees than they need at the moment, so it’s perfectly logical that they’re looking for employees to volunteer for leave. By offering a paid leave or early out option for more employee groups, American is much more likely to reach their goals in that regard.
At the same time, there is an element to this whole government aid situation that leaves me scratching my head — the government essentially is covering the payroll for airline employees for the next six months, but now airlines are getting a good chunk of employees to take leave or accept an early out. Presumably the airline is pocketing the difference, or using it towards something else.
I’ll be curious to see just how many employees end up accepting this offer from American…
(Tip of the hat to Paul)
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