Airline CEOs: Grants needed to avoid mass layoffs

CNBC's Phil LeBeau reports on the latest from airlines as they try to grapple with the slowdown in travel brought on by the coronavirus outbreak.

U.S. airlines on Saturday warned they will have to furlough workers unless Congress approves a $58 billion aid package that includes grants, not only loans, as the industry reels from the impact of coronavirus.

Senate Republicans last week proposed legislation that included a $58 billion in aid for passenger and cargo carriers, but in the form of loans airlines would later have to repay.

“Time is running out,” wrote the CEOs of Southwest, Delta, Alaska, American, United, JetBlue, Hawaiian, UPS Airlines and FedEx, and their lobbying group, Airlines for America, to congressional leaders. It was one in a series of grim messages from airline chiefs and labor unions this week about the abrupt collapse in bookings that coronavirus caused and the potential toll on workers. “Unless worker payroll protection grants are passed immediately, many of us will be forced to take draconian measures such as furloughs.”

U.S. airlines employ close to 750,000 people and large carriers are now shrinking their international networks to the smallest in decades, cutting thousands of domestic flights, parking hundreds of jets and urging employees to take unpaid leave, in a bid to save cash as demand crumbles.

Hundreds of aviation workers are already out of a job. Some 2,400 airport concession worker have been idled as have close to 300 catering workers, according to the Unite Here union. Minneapolis-based Compass Airlines, a regional carrier with 1,300 employees, said last week that it plans to shut down after its clients, Delta and American, reduced flights.

Delta said Friday that it expects its second-quarter revenue to fall 80% or by $10 billion. Some 13,000 of the company’s roughly 91,000 employees have volunteered to take unpaid leave but CEO Ed Bastian told staff that more volunteers are needed.

United plans to cut 90% of international service scheduled for April and warned it may have to lay off thousands of workers if Congress doesn’t act fast enough. It said Saturday that it will reinstate some flights between several European cities, Sao Paulo, Brazil, Seoul, South Korea to the U.S. to help displaced passengers.

Without “sufficient government support by the end of March, our company will begin to take the necessary steps to reduce our payroll in line with the 60% schedule reduction we announced for April,” CEO Oscar Munoz, the airline’s president, Scott Kirby, who takes the helm next month, and several labor unions told employees in a memo. “May’s schedule is likely to be cut even further.”

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