Airlines say massive job cuts are inevitable after bailout money dries up


US airline workers have been largely spared from the carnage that’s pushed the country’s unemployment to record highs since the start of the coronavirus pandemic. But those same workers -— roughly 750,000 pilots, flight attendants, baggage handlers, mechanics and others — will soon be among the most at-risk for losing their jobs.

The federal bailout for the airline industry barred layoffs, involuntary furloughs or pay cuts for employees. But executives have been blunt that job cuts are coming once that prohibition lifts on October 1, with estimates that up to a third of the sector’s jobs could disappear.
The airlines have already requested that workers take voluntary unpaid or low-paid leaves. About 100,000 workers at the four largest carriers — American (AAL), United, Delta (DAL) and Southwest — have done so, equal to about 26% of those companies’ staffs at the end of 2019.
But even with that level of voluntary leaves, $25 billion in grants and low-interest loans from the federal bailout known as the CARES Act, airlines are hemorrhaging millions of dollars a day. The first-quarter losses in the industry topped $2 billion. The second quarter will be much worse.
Southwest (LUV) CEO Gary Kelly said on CNN this week that the carrier is going to do “everything that we can to preserve jobs.” But he pointed out that the federal grant money goes straight to the airlines’ employees, and doesn’t cover all of the company’s payroll between now and September 30.
“We have a lot of cash today, but we burned through about almost a billion dollars in the month of April as an example,” he said. “So you do the math in your head and you just can’t survive that way.”
Deep, permanent cuts in the well-paying jobs found across the industry are inevitable come fall, even if the economy has improved by then, because it’s clear that it will take years for air travel to return to previous levels.
“Ultimately, we will likely see 95,000 to 105,000 jobs lost in the US airline industry,” said Helane Becker, airline analyst at financial services firm Cowen, in a note.
Airlines are running up huge losses now, partly because they can’t furlough or cut their staffs more deeply despite their bare-bones flight schedules, even though passenger traffic has essentially fallen to zero.

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