Airline holidays: New unemployed United and American Airlines eagerly await extension of CARES law

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CHICAGO – United Airlines and American Airlines will move forward with thousands of employees on leave as the CARES law expires. In a letter to employees on Wednesday, American Airlines announced it would begin the process of laying off 19,000 employees as the payroll support program expired on September 30.U.S. CEO Doug Parker said he had spoken personally with Treasury Secretary Steve Mnuchin, who told him that a bipartisan COVID-19 relief plan that would prolong the PSP was possible in the coming years. days. Parker added that if Washington comes to an agreement with $ 25 billion for the airlines “over the next few days,” the company will cancel 19,000 leaves that are scheduled to begin Thursday and recall workers. “Continue to contact your elected officials to explain the importance of reaching an agreement,” Parker wrote.

United Airlines also said it will involuntarily lay off more than 13,000 employees as of Thursday.

The carrier had previously informed 36,000 employees that it was at risk of losing jobs, but was able to reduce that number to 16,000 through various voluntary buy-back and early retirement programs. The carrier has since said it was able to further reduce the total number of leaves by working with union partners, introducing new voluntary options and coming up with creative solutions that would save jobs.

“It hurts for my airline, it hurts for all airlines, it hurts for all the employees and all of us who love to travel,” said Karen Harper, retired flight attendant, who worked for United for 32 years. . She did take a few laps of her own, but nothing like it.

“In the early 1970s, we were flying very large planes with five passengers on board. So the economic ups and downs over the years have been dramatic, then of course after 9/11 you walked into an airport and they were empty, ”she said.

Before the COVID-19 pandemic, United had just under 100,000 employees.

The measures taken by two of the country’s four largest airlines represent the first – and probably the largest part – of the unintentional job cuts in the industry in the coming days.

Airlines employees and executives made 11th hour appeals this week to Congress and the Trump administration to avoid the now expired leave.

Passenger airlines and their unions are pushing for taxpayer dollars to pay workers for six more months, until next March. Their demand is linked to stalled negotiations over a broader pandemic relief measure.

Industry officials acknowledged that the outlook for action was grim ahead of Thursday’s deadline. They said, however, that they were applauded the House this week included airline payroll aid in a $ 2.2 trillion relief plan that came close to Republicans’ preference. for a lower price.

“It gives a glimmer of hope that something will be done,” said Nicholas Calio, president of Airlines for America.

Mnuchin said Wednesday evening that the administration wanted to help hotels, airlines and schools. He said he was speaking with House Speaker Nancy Pelosi, but hinted that the White House did not want to go over about $ 1.5 trillion – $ 700 million below the House Democrats’ figure .

“I don’t think we’re going to make any significant progress” until Thursday, he told Fox Business.

Calio foreshadowed comments from American and United suggesting that Thursday might not be a difficult deadline – airlines could cancel some leave if an agreement between the White House and Congress Democrats seems imminent.

“Ideally, if it goes beyond Thursday, they will be close to a deal and say ‘Wait a few days’ and we can wait,” he said. “Beyond that, the notices have disappeared and the holidays will come into effect. ”

Sara Nelson, president of the Association of Flight Attendants, said she is still awaiting action from Congress, as majorities in the House and Senate have shown support for greater relief from airlines. She said a bailout that keeps airline workers in jobs would be cheaper for the government than putting them out of work during a pandemic.

“These are people who won’t be able to pay their rent, they won’t be able to take care of themselves,” Nelson told CNBC.

In addition to American and United, small airlines have sent layoff warnings to several thousand employees. Delta and Southwest, which entered the pandemic in stronger financial shape than American and United, have lost thousands of jobs through voluntary departures, but do not plan to lay off workers immediately.

Airlines have persuaded tens of thousands of employees to take early retirement or severance packages. But even after these offers, airlines have more pilots, flight attendants, mechanics and other workers than they need.

Critics say airlines shouldn’t be given special treatment and subsidizing their workforce will only delay companies’ need to adapt to slowing travel – which even airline groups believe last three or four years.

“Airlines are always the first to ask for help. They are bailed out again and again, ”said Véronique de Rugy, researcher at George Mason University and columnist for a libertarian magazine, in a recent interview. “Airlines have a habit of not preparing properly for the next emergency because they know they are going to be bailed out. ”

Some also believe that airlines should use private loans to keep their employees. But some passengers agreed it was a tough situation across the board.

“This year is not good for anyone, so everyone is going through it right now,” said Gabriella Soto, who also lost her job during the pandemic.

In March, Congress approved $ 25 billion mostly in grants to cover passenger airline payrolls through September and up to $ 25 billion more in loans that airlines could use for other purposes. Late Tuesday, the Treasury Department announced that it had granted loans to seven major airlines: American, United, Alaska, JetBlue, Frontier, Hawaiian and SkyWest.

American now expects to borrow $ 5.5 billion from the Treasury, and United can raise $ 5.17 billion. Airlines have also borrowed billions from private lenders. They could use that money to keep employees – as critics like de Rugy suggest – but they are trying to cut spending in case ticket revenues remain severely depressed for a long time.

Air travel to the United States remains down nearly 70% from last year. Signs of a modest recovery faded this summer as COVID-19 cases increased in many states. Traditionally lucrative business and international travel is even weaker than domestic pleasure flights.

WLS-TV, KABC-TV, ABC News, and Associated Press contributed to this report.

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