Airlines Work to Strike Labor Deals
- American is the latest airline to send a WARN Act letter to its employees, as all U.S. companies must do before undertaking any mass layoffs. The carrier said it was hoping to avoid layoffs and furloughs after Sept. 30, when the CARES Act stimulus expires. But traffic and demand have not rebounded enough. Although several thousand employees have already taken early retirement or voluntary separation packages, management said more cuts will need to be made to meet the anticipated reduction in demand this autumn.
More specifically, American said it might need to lay off or furlough an additional 25,000 employees. To be clear though, that’s an absolute worst-case scenario, and management said it did not expect to reduce headcount by that much. American, meanwhile, is now offering new voluntary separation packages that preserves flight and medical benefits, based on seniority. “We know American will be smaller going forward, and we must right-size all aspects of our airline to adjust to that new reality,” CEO Doug Parker and President Robert Isom said in a letter to employees.
- United and the Air Line Pilots Association (ALPA) have struck a deal to limit pilot furloughs, the union and the company said. Earlier this month, United in a memo to employees said it would need to furlough or lay off as many as 30k workers — including more than 2k pilots — in October, after the CARES Act stimulus expires. In that memo, United said not as many employees as it expected took early retirement or voluntary separation offers. (Such offers are less appealing when the economy is such that it would be difficult to find another job).
Now, United and ALPA have reached an agreement for enhanced early retirement packages, particularly for pilots aged 62 or older. Other offers include voluntary reductions in hours and leaves of absence.
- Aer Lingus ground crew represented by the SIPTU union rejected the carrier’s Covid recovery plan. Aer Lingus had proposed a way to return some furloughed employees and restore the pay of those whose salaries have been cut, but the union said the carrier’s offer to restore pay to 50% of pre-pandemic levels was not sufficient. Aer Lingus said it may now have to cut up to 270 ground crew jobs, and up to 500 jobs across its work groups. The union said members cited ongoing uncertainty in the aviation industry as a reason for rejecting the proposal.
- British Airways and BALPA, its pilot union, have agreed to a deal that would reduce the number of pilots the carrier will furlough from more than 1,200 to 200. In order to preserve those jobs, however, pilots will have to take a pay cut of 16% and are required to take two weeks of unpaid leave. They’ll have to forego pay increases too, until September 2022. But if demand begins to return before then, pay will be gradually restored.
- Delta is proposing to cut guaranteed minimum pilot pay by 15% in exchange for no involuntary furloughs. Earlier this month, the carrier had warned that it may need to reduce its pilot workforce by as many as 2,500 employees. With the new proposal, all pilots will retain their jobs, but flight hours may be reduced. The ALPA union has not yet responded to the proposal. Delta said 1,700 pilots have taken early retirements, but it still needs to reduce costs and address overstaffing.
- Southwest CEO Gary Kelly warned that layoffs or furloughs — the first in the company’s 50-year history — could be necessary without a “dramatic” increase in demand this autumn. The prospect of such a spike appears to be evaporating as Covid cases seem to be the only thing spiking around the country. Employees had until last week to opt for one of several voluntary separation packages.
- Unable to reach a deal for pay and work rule concessions with its flight attendant union, Icelandair will “permanently terminate the employment” of all current crewmembers. Oddly, the airline added that pilots would temporarily take over responsibility for onboard safety, with onboard passenger services at a minimum (as they have been since the Covid crisis began). The next step? Icelandair will “initiate discussions with a counterparty within the Icelandic labor market” to secure a new group of flight attendants working on terms management thinks more conducive to surviving the crisis. Iceland’s government promised to support the airline financially, but only after the airline restructured contracts with unions, lessors, lenders, and other stakeholders.