Airlines warn of massive job cuts in October, despite $25B in bailouts

Airlines warn of massive job cuts in October, despite $25B in bailouts
Airlines warn of massive job cuts in October, despite $25B in bailouts

$25B later… Back in April, airlines got $25B in bailouts from the US government so they could continue paying their hundreds of thousands of employees. Under the terms, airlines can’t make any layoffs or job cuts until September 30th. The hope was that the funds would be enough to tide airlines over until October, when travel was expected to pick up again. Reality check: it’s still bad.

  • While travel has ticked up since mid-April — when airlines had 96% fewer US passengers than they had in April 2019 — it’s still pretty abysmal.
  • On July 16th, the number of passengers passing through TSA was down 74% from normal times a year ago. COVID cases are surging again, so it doesn’t seem like this will trend well.

Honestly just sad… With depressed travel demand and high expenses, US airlines are burning through their bailout bucks. Now tens of thousands of employees are fearfully waiting for October 1st, when the ban on job cuts expires:

  • American warned 25K employees (almost 20% of its workforce) about potential cuts, citing an 80% drop in sales.
  • United told 36K employees (almost 40% of its workforce) that they could be furloughed.
  • Southwest, which has never had an involuntary furlough, told employees that cuts will happen unless passenger numbers 3X by the end of the year.
  • Delta, which took a $5.7B loss last quarter, might have to cut pilots’ pay to avoid furloughs. CEO Ed Bastian called the pandemic’s effect on the (formerly thriving) airline “truly staggering.”

Was the bailout a waste?… The government spent $25B of taxpayers’ money to save US jobs, but it looks like jobs are likely to be cut anyway. It’s even possible that airlines will still go bankrupt. Buuut: Had the government not bailed out the airlines, layoffs likely would have come much earlier. That would’ve meant government $$$ going to workers through unemployment checks. With the bailout, the gov gets to continue collecting income tax from those employees — at least until Sep 30th. For the bailout to have a happy ending, we need to slow COVID (fast).


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