Airlines, Employees Brace for an Ugly Fall

As payroll protection funds run dry, carriers prepare for layoffs, furloughs, other deep cuts

By Jeff Martinelli

Published July 20, 2020

Read Time: 2 mins


Oct. 1, 2020.

That’s the date America’s airlines circled on the calendar back in March once the CARES Act,  which provided carriers with $52 billion in payroll protection to soften the impact of COVID-19, became law.

Oct. 1 is the date when employment regulations imposed on airlines that accepted funds expire, allowing carriers to lay off or furlough their workers.

Airline officials have been working for months to find creative ways to stave off layoffs and financial disaster. But the situation is dire.

The numbers tell the story. In just the last two weeks, airlines have made the following moves:

  • United Airlines notified 36,000 employees of possible layoffs and furloughs.
  • American Airlines has said it may have to cut 25,000 employees from its payroll.
  • About 17,000 Delta Air Lines employees took advantage of early retirement or buyout plans.

That’s 78,000 airline employees who could be facing a different job outlook come the morning of Oct. 1. And those aren’t the only airlines facing a tough fall.

Southwest Airlines CEO Gary Kelly told company employees that bookings would have to increase dramatically to avoid reducing staff. The airline also rolled out an incentive program for employees to voluntarily leave the airline.

“Although furloughs and layoffs remain our very last resort, we can’t rule them out as a possibility obviously in this very bad environment,” Kelly said in a message to employees. “We need a significant recovery by the end of this year — and that’s roughly triple the number of passengers from where we are today.”

Air travel has decreased dramatically during the pandemic. Just fewer than 10 million people traveled in June compared to more than 37 million during the same period last year.

Those numbers have some politicians looking for support for another round of relief funds. Oregon Rep. Peter DeFazio sent a letter to Congress supporting the airline unions in their appeal to keep workers employed.

“With the current resurgence of COVID-19 in several states across the country and a vaccine for the virus yet to be developed, passenger demand for air travel will not recover before (Sept. 30),” DeFazio wrote.

Strategic moves

Business Insider magazine reported that JetBlue was considering laying off 300 employees and outsourcing other jobs when October arrives.

The airline is continuing its practice of keeping middle seats open on larger airplanes and aisle seats vacant on smaller planes, through Sept. 8. Other airlines have made similar pledges as a way to social distance at 30,000 feet.

Bigger news came last week when JetBlue and American announced a codeshare agreement that allows JetBlue customers to fly more than 60 American routes, while American customers have access to more than 130 JetBlue operated flights.

The move benefits both carriers: JetBlue’s solid performance in the Boston and New York markets will help American, while JetBlue customers get the bonus of American’s transatlantic service.

“(The agreement) creates a new competitive choice in the Northeast, where customers are longing for an alternative to the dominant network carriers,” JetBlue president and chief operating officer Joanna Geraghty said in the statement. “This partnership with American is the next step in our plan to accelerate our coronavirus recovery.”

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