Airlines Drop Plans To Furlough Employees After COVID-19 Relief Bill Passes

Image source: American Airlines

Major US airlines dropped plans to furlough thousands of employees on Wednesday after the House passed its $1.9 trillion COVID-19 economic relief package that included an extension of the payroll support program. 

As part of the latest federal stimulus funding, $14 billion will go to airlines to cover employee pay and benefits for an estimated 27,000 workers through the end of September 2021.  

In February 2021, major passenger air carriers, including American Airlines and United Airlines, warned thousands of employees they would be furloughed in April if the payroll assistance, which was first included in last year’s CARES Act, was not renewed. 

According to ABC News, American Airlines chief executive officer Doug Parker and president Robert Isom told employees in a memo Wednesday the furlough notices are “happily canceled – you can tear them up!”  

United Airlines chief executive officer Scott Kirby said the funding “shows a continued commitment to our industry and our role in helping the economy recover.” 

Since March 2020, Congress has awarded $54 billion for payroll assistance to airlines, an industry hit hard by the pandemic.

In 2020, airlines lost over $35 billion, and the industry does “not expect to return to profitability until midway through 2021,” Reuters reported. 

Airlines For America, an industry trade organization that represents seven major carriers, estimated passenger airlines are still burning through $150 million of cash per day. 

“This global health crisis has had an unprecedented impact on the U.S. airline industry," said Nicholas E. Calio, chief executive officer of Airlines for America. "At its lowest point, passenger volumes were down 96% to a level not seen since the dawn of the jet age. Today, passenger volumes remain down nearly 60%, carriers are operating 40% fewer flights than this time last year and net booked revenue is down 74%,” 

Calio praised the latest extension in federal aid, saying it “is vital to have our employees on the job and ready to assist as our nation prepares to move forward from this crisis.”

The continued rollout of COVID-19 vaccines in the US has boosted the industry’s confidence that passengers will soon return to fly the friendly skies as soon as this summer. In anticipation of a rebound, airlines have been busy adding flights to meet an anticipated increase in demand, as well as slashing ticket prices to attract travelers who may be weary of boarding a plane this year. 

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Source: Equities News

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