More Job Losses in the Airline Industry

The airline industry continues to decline and employees losing their jobs by the day, despite the U.S. labor market showing signs of recovery.

Tens of thousands of airline employees have lost their jobs due to the impact of the coronavirus on the industry. The next few months would be very challenging for many former airline workers.

Most U.S. airlines have alerted the remaining employees of a possible job loss by October 1, when the $25 billion federal paycheck support expires. With this, more than 75,000 employees will lose their jobs.

In June/July, the number of unemployed people in the United States hit nearly $40 million. Although the U.S. Department of Labor announced earlier this month that the number has dropped by more than half, 16.e million Americans still remain out of work.

The new national aid package that could extend airline support by another $25 billion, has won bipartisan support from lawmakers and President Trump. However, Congress and the White House are yet to reach an agreement on the new package. The move was proposed by labor unions and airline company executives, to support employee payrolls until March.

Until the new national aid package is included in the next stimulus bill, airline workers remain in limbo. Without inclusion in the new stimulus bill, there could be a higher unemployment rate in the industry than the previous months.

“Anyone who is losing their job now is looking at a job market that is really unfavorable to them,” said Sara Nelson the president of the Association of Flights Attendants-CWA. “This is a horrible position to put people in… We’re keeping the whole country in this position of uncertainty.”

The Association of Flights Attendants-CWA is the labor union representing cabin crews at several airlines.

In the last quarter, the four biggest U.S. airlines lost $10 billion, combined. Although travel demand has slightly increased, the demand for air travel is still down 30% of last year’s summer levels, according to the Transportation Security Administration at U.S. airports.

The International Air Transport Association also forecasts that demand in global air travel will not fully recover to 2019 levels until 2024. Concerning the matter, Severin Borenstein, a professor of business administration and public policy at the University of California-Berkeley's Haas School of Business said, the drop in demand for air travel is certainly going to have a “devastating effect.” “The U.S. paid the airlines a whole lot of money to keep people on the payroll and the moment that stops they’re going to do what airlines do and they’re going to cut flights that are uneconomic.”

Many airlines have already cut flights, hoping that by this summer demand would increase, but that hasn’t been the case. “At the beginning of April, we saw the sharpest, deepest drop in demand in history, far worse than 9/11 or the Great Recession or any other stress test scenario that anyone had modeled,” said United Airlines CEO Scott Kirby.