U.S. Airlines Leave Door Open For PSP Extension
U.S. airlines are continuing to push Congress to approve additional federal payroll support, even after initiating a mass round of furloughs that swept up tens of thousands of workers on Oct. 1.
Without an extension of the CARES Act Payroll Support Program (PSP), which funded the bulk of airline labor costs between April and October, Southwest Airlines president and CEO Gary Kelly warned on Oct. 2 that management will be “forced” to seek additional concessions from employees, potentially including furloughs and layoffs.
While Kelly said the PSP allowed Dallas-based Southwest to completely avoid furloughs and layoffs through the year-end, he cautioned that the company continues to burn through cash at an unsustainable pace. The airline estimated in a mid-September securities filing that daily cash burn in the 2020 third-quarter is expected to be $17 million per day.
“As the pandemic and its effects on our industry continue, we need an economic relief package that includes a clean extension of the PSP to buy us six critical months to see our way through to the other side of this crisis, and hopefully by third-quarter 2021, travel will recover to profitable levels,” Kelly told employees in a video message, viewed by Aviation Daily.
“If a PSP extension fails, as we have warned for months, we’ll be forced to find a way to further reduce our spending—reduce our salaries, wages and benefits, specifically—by seeking concessions, or as a last resort, layoffs and furloughs,” Kelly added.
American Airlines CEO Doug Parker has also not given up on the prospect of additional payroll support, pledging to employees in a Sept. 30 memo that the Fort Worth-based carrier will reverse its 19,000 furloughs and recall all affected workers to active status should Congress approve an extension “over the next few days.”
“It is a privilege to advocate on behalf of the hardworking aviation professionals at American and throughout the industry, and you have my assurance that we will continue to do so in the days ahead,” Parker wrote.
A spokesman for United Airlines told Aviation Daily that the company would also reverse its 12,000 furloughs in the event that Congress agrees to more payroll support. American and United accounted for the lion’s share of furloughed employees on Oct. 1, with more than 30,000 split between them.
“We implore our elected leaders to reach a compromise, get a deal done now, and save jobs,” United said in a statement.
House Speaker Nancy Pelosi (D-California) and Treasury Secretary Steven Mnuchin continue to negotiate toward a larger coronavirus relief package, although the two sides remain at odds over the final price tag.
On Oct. 1, House Democrats voted to approve a $2.2 trillion package that would include $25 billion in additional PSP funds for airlines, as well as $13.5 billion in aid for airports. Mnuchin, on the other hand, has proposed a $1.5 trillion package, which also includes $20 billion in more aid for airlines.
Pelosi on Oct. 2 issued a statement calling on airlines to delay furloughs as lawmakers work on a relief measure—contained in either a standalone bill advanced by House Transportation Committee Chairman Peter DeFazio (D-Oregon) or as part of comprehensive legislation.
“The massive furloughs and firings of America’s airline workers jeopardize the livelihoods of tens of thousands and threaten to accelerate the devastating economic crisis facing our nation,” said Pelosi. “Today, I am calling on the airlines to delay their devastating job cuts as relief for airline workers is being advanced in Congress.”
Unions representing airline worker also continue to push for a PSP extension, despite the increasingly dim prospects.
“ALPA strongly encourages all parties to continue negotiating toward a coronavirus relief package that will help stabilize the airline industry and protect frontline aviation workers,” the Air Line Pilots Association said in a statement.