Airline Industry Looks Towards a Payroll Support Program Extension Amidst Economic Struggles
United Airlines Airplanes Stationed in San Francisco International Airport (pointswithacrew.com).
United Airlines protected 2,800 pilots from being furloughed by ratifying a deal in case Congress does not pass legislation to extend the payroll support program of the CARES Act. This means that while there will be fewer workdays and less pay, all 13,000 United pilots will keep their jobs without risk of being furloughed.
Captain Todd Insler, chairman of the United Master Executive Council of the Air Line Pilots Association, voiced his approval of this deal: “Our members understood that in order to protect pilot jobs, we needed to approve this agreement… I am proud of our pilots for showing the unity and resolve needed in the face of uncertainty.”
This deal arose in the midst of a new bill proposed by Republican Senators Roger Wicker and Susan Collins to authorize $28.8 billion in payroll assistance for mitigating the impact of the COVID-19 pandemic on airlines. The legislation followed previous Congressional approval of $25 billion in payroll assistance in March that “required airlines to not cut jobs or flights through Sept. 30.”
The International Air Transport Association (IATA) released two scenarios in early March detailing the possible impact of the pandemic on the airlines. Specifically, “the more extreme one forecast a global loss of revenue of $113bn.” However, IATA revised this projection in June, predicting that “Revenue will fall by $419bn this year, precisely half of what airlines earned in 2019.”
The U.S. Travel Association cited safe travel as a fundamental component of the country’s economic recovery. Still, with the airline industry in a depression of 51 percent unemployment and a forecast of a $519 billion decline in travel spending this year, recovery relies upon consumer confidence and guaranteed safety when flying.
Economic recovery is critical for airlines, but such a rebound requires certain conditions to be in place. American Chief Executive Doug Parker explains how a payroll support program preventing the furlough of pilots is essential to the industry resuming flying after the pandemic. He explained on “Face the Nation” that “once we furlough those employees it’s really hard, for example, to get pilots back in training… So once we’ve furloughed and shrunk airlines, our ability to continue [providing] services needed to pull the economy back out of this is going to be severely hampered.”
Despite these positive reinforcements, a Moody’s report revealed a grim future for the airline industry. The report’s forecasts that with the projected production and distribution of COVID-19 vaccines, passenger demand will return to 2019 levels by the end of 2023. However, the report highlighted the necessity of government assistance, such a payroll support program, as this support “will be required for the airline industry if employment levels are to be maintained near already reduced levels [...] and potentially to stave off additional airline restructurings and insolvency proceedings.”