Black October expected for airline jobs in the United States

Unless there is a last-minute agreement in the US Congress, airlines weakened by the coronavirus pandemic are preparing to lay off tens of thousands of people from Thursday in the United States.

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Treasury Secretary Steven Mnuchin wanted to be optimistic on Wednesday, saying on CNBC: “I hope that by tomorrow we will have an agreement on a global envelope” and “that if we succeed, the companies will postpone their actions ”.

But among the biggest airlines, American Airlines and United Airlines are maintaining their threats to mass fire workers for now.

American Airlines could lay off up to 19,000 people as of Thursday. At United Airlines, it would be just over 13,000.

The loans granted Tuesday evening by the Ministry of Finance to seven companies for a total amount of 25 billion dollars do not change the situation, assured AFP sources close to these companies.

This money is intended to help them cover current expenses but is not dedicated to salaries.

American Airlines, Delta, United and Southwest, had pledged in the spring not to fire anyone until September 30, in exchange for subsidies also worth $ 25 billion.

But many passengers remain reluctant to fly in a confined space, international flights are still subject to strict restrictions and business travel is at half mast.

The number of customers passing through security at U.S. airports is still down about 60% to 70% from the same period in 2019, according to government figures.

Companies have already slashed a lot in their workforce through voluntary departure plans, early retirement and unpaid leave.

At Delta, more than 40,000 employees have already opted for one of these programs. Southwest has separated, temporarily or permanently, from 27% of its employees.

But this is not enough.

Government support intended to help pay wages expires on Wednesday and talks between Democrats and Republicans on a new plan to support the economy remain at an impasse for the moment.

The unions, which like the bosses of the sector have been pleading in Washington for several weeks for an extension of the subsidy program, estimate that the sector could lay off a total of more than 100,000 employees.

AFP

Threat

The threats of massive layoffs are unlikely to be fully implemented, however tempers Peter McNally of Third Bridge.

On the one hand, the airlines have raised a lot of money in recent months to deal with the crisis and their financial situation is not as desperate as it might appear in the spring.

Some companies like American Airlines have seized the opportunity to draw from the envelope of 25 billion dollars made available to them by the government for loans.

Others like Delta or Southwest preferred not to have to meet the requirements of the State (minority stake acquisition, temporary ban on paying dividends, limit on executive compensation) and borrowed heavily from the financial markets.

Airlines must also be ready to expand their flight programs once air traffic takes off again.

In this perspective, smaller companies like JetBlue or Alaska Airlines “may be less exposed because they are less dependent on international flights and business travel” than United, American or Delta, notes Mr. McNally.

The recovery will in any case depend on the large-scale distribution of a vaccine or an effective treatment, and the return to normal in the companies.

AFP

Public sector decimated

Airlines are far from the only ones affected by the pandemic.

Disney, for example, announced Tuesday the loss of 28,000 jobs in the United States.

Government aid has enabled businesses and individuals to keep their heads above water.

But like those allocated to the aviation sector, some aid will soon expire, underlines Nancy Vanden Houten of Oxford Economics.

The funds dedicated to unemployment benefits paid by the federal government in addition to those of the local authorities, already reduced from 600 dollars per week to 300 dollars in early August, “should dry up during the month of October”, warns the economist .

State and local government finances are also hit hard by the drop in economic activity.

The think tank Economic Policy Institute estimates that, without government help, 5.3 million people could be made redundant by the end of 2021 in the public sector.

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