But even with that level of voluntary leave, $ 25 billion in grants and low-interest loans from the federal bailout plan known as the CARES Act, airlines bleed millions of dollars a day. The industry’s first quarter losses exceeded $ 2 billion. The second quarter will be much worse.
This is largely due to the fact that federal aid covers only two thirds of the total labor cost up to September, said Philip Baggaley, Standard & Poor’s leading airline credit analyst. He believes that between 20% and 30% of airline jobs can be eliminated through acquisitions and early retirement offers, along with involuntary layoffs.
“We have a lot of money today, but we burned around a billion dollars in April as an example,” he said. “So you do the math in the head and you just can’t survive that way.”
“Ultimately, we will likely see between 95,000 and 105,000 jobs lost in the US airline industry,” said Helane Becker, airline analyst for financial services company Cowen, in a statement.
“Our schedule is down 90%. And we expect it to remain at that level until we start to see demand picking up,” said UK President Scott Kirby. “If demand remains significantly reduced on October 1st, we simply will not be able to withstand this crisis as a company without taking some of the more difficult and painful actions. These include decisions about involuntary theft, further reductions in hours, as well as other actions they will have. an immediate impact on our people and their livelihood “.
But unions that fought with executives to get the CARES law passed have contested some of the airline’s cost-cutting moves. The train drivers union, which represents 27,000 ground workers in United, including baggage handlers and customer service staff, filed a federal lawsuit this week to prevent United from reducing its members’ hours by 10 hours per week.
United stepped back and volunteered the cut of hours instead of mandatory, although it said it could still institute mandatory cuts if there were not enough volunteers. The company insists that reduced hours are allowed by the CARES law and its employment contracts.
Even if there was no ban on layoffs, airlines would not cut jobs as profoundly as they cut their plans, said S&P’s Baggaley.
“They wouldn’t be able to cut to those levels and have a viable airline coming out of the other side,” he said.
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