Much of the travel industry has been asking for government aid, given the unprecedented situation we’re in. There has been a lot of controversy surrounding US airlines requesting government aid, given that they’ve used much of their profits over the past many years on stock buy backs, rather than saving up for a rainy day.
US airline executives’ latest letter to Congress
Today a letter has been sent to Congress signed by most major US airline CEOs — they’re taking a different tone with their message, but also painting a very grim picture of the future if they don’t get any assistance.
This letter is signed by the CEOs of most major US airlines, including Alaska, American, Delta, Hawaiian, JetBlue, Southwest, and United. It’s also signed by the CEOs of Atlas Air, FedEx, and UPS, as well as the CEO of Airlines for America.
Here’s the letter, in its entirety:
Dear Leader McConnell, Leader Schumer, Speaker Pelosi and Leader McCarthy:
On behalf of 750,000 airline professionals and our nation’s airlines, we respectfully request Congress to continue to move expeditiously to pass a bipartisan proposal that includes a combination of worker payroll protection grants, loans and loan guarantees and tax measures.
Time is running out. The worker payroll protection grants are critical to saving the jobs of our employees. Over the past week we have communicated to our employees the dire situation we are in and the potential impacts on them if our government doesn’t step up to help.
We are doing our part. Over the past decade we have reinvested over 73 percent of our operating profits back into our people and product, creating good paying jobs at a rate that has outpaced other sectors. As a result of a global pandemic and government actions to contain it, we are now undertaking over $30 billion of self-help measures, including asking our employees to take voluntary unpaid time off, parking planes and trying to obtain financing in today’s credit market. Those markets are closing up. Given the extreme nature of this situation, we respectfully urge Congress not to pursue opportunistic measures that will hurt, not help our ability to recover. Unless worker payroll protection grants are passed immediately, many of us will be forced to take draconian measures such as furloughs.
If Congress is able to reach a bipartisan agreement on these three critical elements, airlines are committed to ensuring that:
- If worker payroll protection grants are enacted, equaling at least $29 billion, participating passenger and cargo air carriers will not furlough employees or conduct reductions in force through August 31, 2020.
- If loans and/or loan guarantees are enacted, equaling at least $29 billion, participating passenger and cargo air carriers commit to:
- Placing limits on executive compensation;
- Eliminating stock buy backs over the life of the loans; and
- Eliminating stock dividends for the life of the loans.
The breadth and immediacy of the need to act cannot be overstated. It is urgent and unprecedented.
We are united as an industry and speaking with one voice. We urge you to swiftly pass a bipartisan bill with worker payroll protections to ensure that we can save the jobs of out 750,000 airline professionals who are coming to work every day to serve the traveling and shipping public.
Key takeaways from this letter
I have two key takeaways here.
First of all, this paints a really grim picture of the current situation. That’s not a surprise (at all), but they’re making it very clear that without government help, airline workers are about to get furloughed.
My second key takeaway is that airline executives are finally starting to have a better narrative here. Up until now their “ask” has come across as out of touch, given the actions of the airline industry in the past few years.
But I think they’re taking exactly the right approach now:
- They’re being very specific in wanting worker payroll protection grants, loans, loan guarantees, and tax measures; they’re putting frontline workers first here, and that’s important
- With at least $29 billion in payroll protection grants, the industry is promising not to furlough any employees through at least the end of August 2020
- With at least $29 billion in loans or loan guarantees, the industry is promising to place a limit on executive compensation, and is promising to eliminate stock buy backs and stock dividends over the life of the loans
I’d be curious about what kind of limits they intend to impose on executive compensation. I’m also intrigued by the concept of promising no furloughs. I largely support that, though the reality is that aviation is more or less coming to a standstill, so will they just pay most employees in full while largely not working at all, or…?
While there are many things I find frustrating about how the US airline industry is run, that’s largely just reflective of corporate America. I think the above letter is perfectly written, and the airlines have come a long way in how they’re presenting their case.
They’re making this about airline workers and are promising limits of share buybacks and executive compensation, which has been a concern for many.
What do you make of this “ask” from US airline executives?