Delta Air Lines’ CEO is making some interesting claims about the billions of dollars in taxpayer support that the airline received during the pandemic…
In this post:
Bastian claims taxpayer support wasn’t a bailout
Delta CEO Ed Bastian was interviewed on Squawk Box this morning. Joe Kernen asked Bastian what he described as a “theoretical question.” The gist of it was that taxpayers bailed out the airlines, and Bastian was essentially asked if the airline owed taxpayers anything.
Bastian’s response?
“While it had been, two years ago, classified as a bailout, candidly it wasn’t a bailout. The money that was provided to the airlines were there to hold employees in place for the period of time it took for the vaccines to show up and people to start traveling again.
The airlines actually did not receive any significant amount of windfall back through the taxpayers, though we greatly appreciate the support. Because had we not received that support, we would have been forced to lay off tens and tens of thousands of people, and we’d be in a position today not having the air service that this country needs.”
Delta didn’t “hold employees in place”
Delta seems to have a very narrow view of what constitutes a bailout, or what purpose it serves. Bastian tries to make the claim that this wasn’t a bailout because it was essentially intended to help the public. Specifically, the government support was designed to “hold employees in place” for as long as it took for demand to recover, so that the US would still have widespread air service.
Indeed, airline payroll support was intended to cover payroll costs for the major airlines for an extended period of time. As a condition of accepting this, airlines had to agree not to fire employees. Was the money used to hold employees in place, though? Delta’s change in employee numbers suggests not:
- In February 2020 (right before the pandemic impacted demand in the United States), Delta had 91,416 employees
- In February 2021 (after the pandemic impacted demand in the United States), Delta had 62,588 employees
Why did Delta’s workforce decrease by ~32% during the pandemic? Well, a lot of the money was used to offer employees early retirement packages:
- A condition of accepting government support was that the airline wouldn’t involuntarily lay off people, but the airline could pay people to voluntarily leave the company
- It was in Delta’s best financial interest to get early retirements from senior pilots and flight attendants, since they’re also the highest paid, and they can be replaced by more junior (and lower paid) employees
- Delta had multiple operational meltdowns during the pandemic due to staff shortages (as did most US airlines), precisely because they spent taxpayer funds on encouraging employees to retire early, rather than “holding” them in place
So I’ve gotta disagree with Bastian’s logic here. He claims that the taxpayer money that the airline received wasn’t a bailout, because it was used to keep employees around. Yet the airline spent a lot of money getting employees to retire early, which leads to lower cost employees in the long run.
Bottom line
Delta received billions of dollars in government support, but the airline wants you to know that “candidly it wasn’t a bailout.” It’s claimed that it wasn’t a bailout since the money was used to keep employees on hand for when demand recovered.
But that doesn’t paint the full picture of what happened, as the airline also spent a lot of money to get employees to retire early. That’s also why we saw Delta have several operational issues due to staff shortages as demand started to recover.
What do you make of Bastian’s claim about taxpayer support?
One thing so often overlooked in this discussion is that a majority of airline workers- including Delta employees- took voluntary leaves of absence (different from voluntary retirements in that the people on leaves of absence expected to- and mostly did- eventually return to work) because they qualified for unemployment while on leave. If that unemployment benefit didn’t exist- a majority of the workforce who left would not have taken a leave and Delta would’ve been...
One thing so often overlooked in this discussion is that a majority of airline workers- including Delta employees- took voluntary leaves of absence (different from voluntary retirements in that the people on leaves of absence expected to- and mostly did- eventually return to work) because they qualified for unemployment while on leave. If that unemployment benefit didn’t exist- a majority of the workforce who left would not have taken a leave and Delta would’ve been stuck paying them to do work for which there was no demand, or Delta would’ve been forced to offer tons more retirement packages. That unemployment insurance that tens of thousands of employees took is as much a bailout as the “bailouts,” and it gets overlooked in assessing just how much government aide the airlines received.
Ed, mate, this doesn't pass the pub test. It looks like a pig, walks like a pig, eats like a pig.......it's a pig. You received MY money. It is called a bailout. Why are you parsing words over something that is quite normal and understandable?? You act as if you are guilty or that you pulled a swifty over the feds.....and us, your customers. What is behind your odd comments, eh?
Baldfaced lying to justify a government-financed economic system that protects the interests of the powerful at the expense of the taxpayer. The airlines were recklessly irresponsible in the way they were buying back shares for years and, as a result, didn't have cash reserves to weather the storm. Short-term greed trumped true management and the government bailed them out just like they did the banks in 2008-2009. Beneath the thin veneer of our "capitalist" system...
Baldfaced lying to justify a government-financed economic system that protects the interests of the powerful at the expense of the taxpayer. The airlines were recklessly irresponsible in the way they were buying back shares for years and, as a result, didn't have cash reserves to weather the storm. Short-term greed trumped true management and the government bailed them out just like they did the banks in 2008-2009. Beneath the thin veneer of our "capitalist" system is a government-funded failsafe that protects the CEOs that are recklessly mismanaging American businesses. Shameful.
It would seem as though you would either have to call it a bailout or a government subsidy. Considering their strong views on ME3 subsidies, I’m surprised he wouldn’t just accept the term “bailout” with a smile and move on.
What a dishonest ungrateful a-hole.
Mr.Bastain doesn't comment on how many people took voluntary leaves and collected unemployment while Delta pocketed 70% of their income provided by the federal government. So the tax payer got hit twice.
The company also proudly proclaimed they didn't change payrates in compliance with the federal funds. However, they cut hours significantly and in many pilots cases moved them to lower paying equipment. Dozens of Captains whose equipment was parked were displaced to First Officer...
Mr.Bastain doesn't comment on how many people took voluntary leaves and collected unemployment while Delta pocketed 70% of their income provided by the federal government. So the tax payer got hit twice.
The company also proudly proclaimed they didn't change payrates in compliance with the federal funds. However, they cut hours significantly and in many pilots cases moved them to lower paying equipment. Dozens of Captains whose equipment was parked were displaced to First Officer positions that paid over 30% less than their pre-covid pay rates along with the associated drop in money contributed to their 401. Where did the money go? Early retirements, tons of training brought about by the rush to park equipment, excessive overtime to try to cover the manning shortage...? Some transparent accounting would be refreshing. The US taxpayer deserves at least that.
Mr.Bastain continues to display his tone-deafness throughout the pandemic.
THATS DELTA AIRLINES FOR BLIND AMERICANS.... ARROGANT AND CROOKS!! THEY TOOK AND NEEDED OUR TAX MONEY TO SURVIVE AND NOW THEY CHANGE THEIR INTERPRETATION AND THINK THAT THE WORLD REVOLVES AROUND THEM. NOW WE SEE THE TRUE COLORS of DELTA FROM TOP MANAGEMENT!!! No respect. I wish the public would stop flying them and hopefully this would teach Bastain and his crowd a good lesson in aviation...
Dude you are a hack! I work for Delta in Atlanta Tec Ops and I know for a fact what you are writing about is a lie! Not only did we NOT get a pay cut we are getting a raise on the first of May, also from someone that valenterd for unpaid leave for 5 months to help our company it really pisses me off reading lies, the one thing that can take money out of my pocket is people like you spreading lies and trying to make Delta look bad!! You should be fired!!
Upper management made dollar decisions [while all kinds of medical supplies, staff & others still travel providing essential infrastructure for the country] Sure it's a bailout if it was federal funding course lots of other people got government cov checks too
He’s right. Employees received a bailout as their salaries were paid by the government instead of unemployment.
These airline ceos were foolish to accept this as firing all these flight attendants would do the same thing as accepting the money.
Not when was used to pay early out retirement [retires don't work there then]
You have zero idea as to what happened or what you’re talking about based on your comment. 80% of the FA workforce took voluntary UNPAID leave and claimed unemployment benefits. That money was used to support the skeleton operation and fund retirement packages for very senior FAs and Pilots, not pay everyone to stay home. Also, they couldn’t just “fire the flight attendants”. Both pilots and FAs can be furloughed but not fired per contract and work rules.
Anyone notice the people who gave the airlines the money aren’t seeking accountability? So the CEO’s can claim anything.
Money is fungible, how do you know he used bailout money to offer early retirement packages? Or is just every dime an airline spends from now on open to public outrage because the government paid unemployment benefits directly to the airlines as a way to get them to hold the jobs and not just fire everyone until the pandemic was over?
As someone who has been in fiscal affairs for 25 years I can confirm that this has been a bail out.
However, it seems that DL has violated - at least in substance - the bail out conditions by dismissing so many staff … Which doesn’t make his statement any better!
Not a single person was dismissed from DAL. If you think that’s the case you are sorely wrong. The average age of mechanics was in excess of mid/high 50’s, with pilots and flight attendants following suit. Employee’s company wide took a 25-100% paycut with optional leave of absence for up to 6 months to help keep the air line afloat.
Take your expertise to the streets…
As amts, we took a 25% paycut. (Only working 30 hours a week instead of the forty.) What happened to that money? I guess employed and fully employed are two different things. Delta scammed their way around the federal rules for the bailout they got. Bastion bragged how well off financially Delta was and could weather any storm. I guess they need a new weather forecaster.
Bastian is a PC jerk, who heads probably the most corrupt airline in the US... Here, in Atlanta nobody seems to be willing to talk how Delta "buys" its exclusive position at the Atlanta airport by "supporting" Atlanta city government.
Skymiles is an extortionist program who robs Delta customers by raising its award ticket requirements year after year: in the last two-three years, it has practically doubled the number of miles required for an...
Bastian is a PC jerk, who heads probably the most corrupt airline in the US... Here, in Atlanta nobody seems to be willing to talk how Delta "buys" its exclusive position at the Atlanta airport by "supporting" Atlanta city government.
Skymiles is an extortionist program who robs Delta customers by raising its award ticket requirements year after year: in the last two-three years, it has practically doubled the number of miles required for an award ticket in business class ...
Take Greyhound and do the traveling public a favor.
Yes, the airline industry was bailed out and Delta got money just like everyone else.
The difference is that Delta was the only airline that did not require a covid vaccination for its employees to maintain their jobs, different from most if not all other US airlines.
and secondly, Delta is already recovering faster than the rest of the industry financially.
No employee is "safe" if their employer is financially unstable. Delta's financial...
Yes, the airline industry was bailed out and Delta got money just like everyone else.
The difference is that Delta was the only airline that did not require a covid vaccination for its employees to maintain their jobs, different from most if not all other US airlines.
and secondly, Delta is already recovering faster than the rest of the industry financially.
No employee is "safe" if their employer is financially unstable. Delta's financial results show that they have already stopped the cash bleed, are investing massively in their business, and expect very strong financials later this year - even as several of its peers are expected to burn billions of dollars in cash throughout the year.
There is a massive difference in how well each airline used the taxpayer money - do not confuse the government as being anything other than taxpayers - and Delta is doing a better job of rebuilding post covid than its peers.
Since Delta always reports its earnings first for the US airline industry and provides forward guidance which everyone watches and extrapolates to the whole industry, Delta's earnings releases ALWAYS generate a lot of attention.
At this hour, DAL stock is up 6% in the middle of strong industry stock increases while market indices are up less than 1%. DAL execs made a whole lot of money for airline investors today despite what was said or not about bailouts.
It was a federal mandate when aa mandated it. Delta being clever with their wording didn’t make it any less of a federal mandate.
And delta forced their employees to take a 33% paycut in 2020 via fewer hours. That’s really the only unique thing about delta with regard to the federal bailout.
and yet those very same semantics that you argue about are what kept Delta from canning employees because of the federal vax mandate.
For the record, I was disappointed that Delta cut the hours of some FT workers but they were not laid off; American and United both touted how many management people they got rid of because they didn't have to follow gov't rules for management people.
So, tell me again, who...
and yet those very same semantics that you argue about are what kept Delta from canning employees because of the federal vax mandate.
For the record, I was disappointed that Delta cut the hours of some FT workers but they were not laid off; American and United both touted how many management people they got rid of because they didn't have to follow gov't rules for management people.
So, tell me again, who was worse at playing semantics? A company that laid off thousands of employees or one that reduced hours temporarily?
Let’s see. You have a mortgage and your company cuts your pay unilaterally by 33% out of nowhere with no notice in the middle of a pandemic with new jobs tough to find. While their competitor doesn’t. Delta was definitely trying to drive people out of the company to take those exit packages, purposefully. I’d never pick one that thinks so poorly of their employees to do that when their largest competitor did not.
And...
Let’s see. You have a mortgage and your company cuts your pay unilaterally by 33% out of nowhere with no notice in the middle of a pandemic with new jobs tough to find. While their competitor doesn’t. Delta was definitely trying to drive people out of the company to take those exit packages, purposefully. I’d never pick one that thinks so poorly of their employees to do that when their largest competitor did not.
And care to say who at aa was canned due to the vaccine mandate? Because you can’t. No one was. Delta’s cute wordplay about a federal mandate doesn’t change the mandate.
You can argue all day long about what was worse but most people recognizing that losing your job - something AA and UA bragged they were doing to management personnel - is worse than a temporary cut in work hours
Nowhere did I excuse ANY airline for how they handled TAXPAYER money and I certainly don't think the industry needed all of it to begin with.
Let's see... Delta is 15% unionized. Delta mandated 85% of their workforce take a 33% salary cut despite happily taking a bailout to prevent that exact scenario. Delta purposefully mandated 33% pay cuts despite a bailout to try to get anyone with real bills to pay to leave the company and find employment elsewhere so they could pay their bills.
AA is 85% unionized. AA did not mandate anything, whatsoever, during the period of the...
Let's see... Delta is 15% unionized. Delta mandated 85% of their workforce take a 33% salary cut despite happily taking a bailout to prevent that exact scenario. Delta purposefully mandated 33% pay cuts despite a bailout to try to get anyone with real bills to pay to leave the company and find employment elsewhere so they could pay their bills.
AA is 85% unionized. AA did not mandate anything, whatsoever, during the period of the bailout time, unlike Delta. For the 15% you reference: with, at least, 4 months notice, AA gave exit packages with full pay or more for 4+ months to those leaving. Their pay was never ever cut during the period of the bailout, unlike Delta's policy.
Learn your facts, Pal. Your friends at Delta are about the most non-employee friendly folks in the industry. They just happen to be better than Putin in marketing to their own people.
Delta's 2020 policy: Mandatory 33% pay cut. Leave if you have a mortgage and care about paying your bills. But here's a nice bonus check when you do. But get the F out and we're docking your pay while you decide.
AA's 2020 policy: Here's full pay for you and Months to figure out what you want to do before your FULL pay stops. But here's a nice bonus check when you figure out your...
Delta's 2020 policy: Mandatory 33% pay cut. Leave if you have a mortgage and care about paying your bills. But here's a nice bonus check when you do. But get the F out and we're docking your pay while you decide.
AA's 2020 policy: Here's full pay for you and Months to figure out what you want to do before your FULL pay stops. But here's a nice bonus check when you figure out your plans.
You love to rant about AA's debt. They have a lot and they have for a while. But Delta's current debt level is built on the backs of their people. Good for them, but their people should know it.
well yes, American fired thousands of management personnel and then bragged about it. United did the same thing.
Your facts aren't even accurate. See the statements from people that say they are Delta employees.
You clearly think it is ok to fire some employees in order to save your job even while ragging that some people had their hours reduced for a few months.
I'm not sure why you want so badly...
well yes, American fired thousands of management personnel and then bragged about it. United did the same thing.
Your facts aren't even accurate. See the statements from people that say they are Delta employees.
You clearly think it is ok to fire some employees in order to save your job even while ragging that some people had their hours reduced for a few months.
I'm not sure why you want so badly to divide people into "ok to screw them but not this group" but it is pretty apparent that you are neither accurate or logical.
None of the airlines should have received anywhere near as much money as they received.
How airlines spent that money varies wildly.
While you continue to pay union dues, the vast majority of Delta employees didn't and won't. If they really didn't like how they were treated, they would unionize further. It is a certain as the sun will set tonight that Delta will remain a largerly non-union airline which is what really frosts you.
Why is it always a game of 'who was worse' among the US3 with you Tim? Delta is just as guilty (or *gasp* worse) in some way with how they've handled things during COVID. The whole point of this post was to call out Ed's specious argument that taxpayer's giving a PRIVATE company (pay no attention to the thousands of other businesses across the US left out to dry) our PUBLIC funds over and over...
Why is it always a game of 'who was worse' among the US3 with you Tim? Delta is just as guilty (or *gasp* worse) in some way with how they've handled things during COVID. The whole point of this post was to call out Ed's specious argument that taxpayer's giving a PRIVATE company (pay no attention to the thousands of other businesses across the US left out to dry) our PUBLIC funds over and over and over again, was somehow not a bailout.
Google is your friend...Bailout: "an act of giving financial assistance to a failing business or economy to save it from collapse."
In March 2020, good ol' Eddy said: "I'm optimistic we will receive their support. That said, the form and value is unpredictable, and we can't put our COMPANY'S FUTURE AT RISK waiting on aid from our government." For which Delta received multiple rounds of BAILOUT money shortly thereafter.
So Tim, what would YOU call it?
I'm not sure what you are arguing about but my very first sentence said that the airline industry was bailed out and Delta got money just like everyone else.
I don't consider it a bailout. Delta didn't do anything to cause the pandemic or for flight demand to reach almost zero. They have zero blame in that regard. At the end of the day, I have to believe they did their best to take care of employees and also have Delta survive throughout the pandemic.
So you wouldn't consider the billions the airlines got after 9/11 a bailout cause it wasn't their fault? Please just stop and chug some bleach.
We cut through the parsing with ease. Secretary Mnuchin stated on more that one occasion that the airlines could choose between a grant in exchange for stock or a loan, both of which would have to be repaid. In other words, one of two forms of cash based on nothing but a sharp economic downturn so that the airline could recover quickly as the pandemic faded while still offering essential air service for such things...
We cut through the parsing with ease. Secretary Mnuchin stated on more that one occasion that the airlines could choose between a grant in exchange for stock or a loan, both of which would have to be repaid. In other words, one of two forms of cash based on nothing but a sharp economic downturn so that the airline could recover quickly as the pandemic faded while still offering essential air service for such things as mail and those of us who flew even before we had a vaccine. If that's not a bailout, I'd like to see a cogent rebuttal. Bastion's is not.
In our town, the pandemic killed off about half of the restaurants we used to visit and like. The ones that are still open now have all new staff that we don't recognize anyone anymore, the prices have almost doubled and the food is fine, but not as good as we remember. But surprisingly, they are always busy despite all of that and we find it less available to us, in general. That's what would...
In our town, the pandemic killed off about half of the restaurants we used to visit and like. The ones that are still open now have all new staff that we don't recognize anyone anymore, the prices have almost doubled and the food is fine, but not as good as we remember. But surprisingly, they are always busy despite all of that and we find it less available to us, in general. That's what would have happened to the airline industry. It was in the public interest to keep competition alive in the airline industry and to keep labor with specialized skills from being dislocated. That was the return on investment that we were entitled to as taxpayers, and we got it.
Would’ve been lower cost for the govt to just pay the affected staff directly, surely? Or would that not leave enough taxpayer cash for share buybacks and investments into foreign airlines?
And let’s not forget how sneaky Delta was in 2020. They didn’t dock pay rates, but forced their employees to work 1/3 less hours to lower their pay.
Incredibly tone deaf comments by Ed. Airlines will do anything but take responsibility for their actions.
The CEO is covering the fact that the money was enough to cover all employees for over a year. Saying they needed the money to keep the employees implies that they would have shut down otherwise, as that's the only way to have zero employees. In other words, the money was needed to bail them out and keep them running.
I am really getting tired of Delta's dishonesty.
Every time their flight arrives 1 min earlier than scheduled, I got a message bragging about their early arrival, but I got no apologies when the flight is 2 hour late.
I can see this culture of insincerity comes straight from the top.
Take Greyhound and do the traveling public a favor.
Truth hurts, doesn't it? Na, I just gonna drive 60mils and fly AA instead.
Anytime the government steps into save a business with loans, guarantees, etc. that's a bailout. Even the Chapter 11 process ends up being a bailout.
Eddy should really go into politics after he leaves DL! Just like anything these days, you can twist situations into any narrative you want.
While SkyPesos may be worst in class, what Delta really excels at is corp-splaining away anything that doesn’t fit its world view. It’s a slimy company in so many respects, but really the entire US airline industry has been a non-stop train wreck dumpster fire up to this point, so...
Eddy should really go into politics after he leaves DL! Just like anything these days, you can twist situations into any narrative you want.
While SkyPesos may be worst in class, what Delta really excels at is corp-splaining away anything that doesn’t fit its world view. It’s a slimy company in so many respects, but really the entire US airline industry has been a non-stop train wreck dumpster fire up to this point, so let Eddy spout away on how virtuous Delta was for graciously not calling the taxpayer bailout what it actually was…
Delta had also determined, before the second (and third!) round of subsidies, that they weren't going to do furloughs.
PSP2 and PSP3 thus did not even get anything from taxpayers. The airline had determined it would make it as a going concern (and not even enter reorganization). In that sense it wasn't a *bailout* but more "free money from stupid people*.
Guess the American taxpayer is funding the pay-by-the-word verbose shilling??
@BenSchlappig Delta’s logic here is so American capitalist, and worse than you describe. In the civilised world, where people care about the poor and the working class, every company has a responsibility to its employees. The public is not responsible for its workforce; the company is. If companies are allowed to profit with no government oversight during the good times, then they have to deal with the bad times, not wait for a government handout,...
@BenSchlappig Delta’s logic here is so American capitalist, and worse than you describe. In the civilised world, where people care about the poor and the working class, every company has a responsibility to its employees. The public is not responsible for its workforce; the company is. If companies are allowed to profit with no government oversight during the good times, then they have to deal with the bad times, not wait for a government handout, and pay employees what they owe them in retirement packages or go under. The bailout was a gesture of solidarity and goodwill for a company that was undergoing extraordinary circumstances: the company should naturally owe that money back to the government. How dare an executive make millions in profits, buyback stocks to make his shareholders happy, then beg the government for money to pay his employees which he should have been able to afford, then say it wasn’t a bailout and they deserved that money to keep serving the country? They are only serving their own pockets. And don’t get me started on the power imbalance between employees and employers, where employers are free to hire and fire as they please but it’s still claimed that the job market is “free and fair”. Fair for who? Certainly not the workers. Americans need to learn what left of centre really means. It doesn’t mean public healthcare. It doesn’t mean higher taxes. It means giving workers equal or majority control in their workplace and democratising labour.
There's nothing 'capitalist' about billions in government subsidies. Literally the opposite. Call it corporatist if you wish...
As opposed to the other airlines, Delta did not make anyone leave the job against their will.
They did offer packages, and if you did your research Delta had and still has a very old workforce. It is a result of it being a good to great place to work.
Where there were no jobs at the moment, such as flight attendant positions, they offered places in other departments for their employees to...
As opposed to the other airlines, Delta did not make anyone leave the job against their will.
They did offer packages, and if you did your research Delta had and still has a very old workforce. It is a result of it being a good to great place to work.
Where there were no jobs at the moment, such as flight attendant positions, they offered places in other departments for their employees to work. Not being encumbered with union contracts in some departments, Delta had the flexibility that other airlines that took the money and laid off thousands didn't have.