Airline Business Weaker Due to Delta Variant

Airline Business Weaker Due to Delta Variant

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Airline Business Weaker Due to Delta Variant

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While summer traffic has been promising, there are troubling signs that the profit season for airlines may have peaked early – due to the continuing Pandemic.

TSA bookings year over year show positive growth throughout commercial aviation. Compared to 2019, the year before the pandemic began to ravage airlines, today’s air traffic is 80% of what it historically should be for August. 

However, it may be too early to declare the pandemic behind us. With the Delta variant clogging hospitals with unvaccinated Americans, airline travel is showing severe signs of weakening. For the third straight week, airline bookings are down and far weaker than in 2019. System bookings are currently 53.8% lower than 2019 levels. That could show that the most profitable quarter for airlines may be shorter this year than the historical average. If the trend continues, many airlines will not have enough summer profits to get them through the rest of 2021 as they might have wanted. 

The cause of the general malaise within airlines can be attributed to the continued COVID-19 pandemic. 

Lucrative business and international travel is down at all airlines and show few signs of a quick comeback. Popular destinations for American air travelers, including France, remain on the CDC’s “Do Not Travel” list. Hawaii is restarting restrictions on travel to the islands, including group sizes. Several other resort destinations are asking visitors to leave as soon as possible, while others extend border closures. All of which are challenges that airlines do not need right now. 

Southwest attributed a general slowdown “close-in reservations” for August to the Delta Variant in an SEC filing last week. Delta, Hawaiian, Air Canada, United, and Frontier have imposed some vaccine requirements for employees. 

recent study of air travelers conducted by Longwoods International is not helping relieve fears of long-term, pandemic-related slowdowns for air travel. According to the research, a shocking 67% of communities want to shut their doors to tourists and their money. This number is high and growing; two months ago, it was at 47%, an already incomprehensibly high figure for areas dependent on tourist revenue. The study also found other indicators that COVID-19 concerns are a serious threat to aviation. 

30% of respondents reported that they would rather drive instead of fly to their next travel destination, with 25% choosing domestic rather than international travel. The number that said COVID-19 concerns would “greatly” impact their travel decisions over the next six months was a staggering 34%. 

If all these indications of weakening air travel demand are accurate, airlines may have hit the high point of their profit season. 

Recent Articles

141 Report: Interview with Mike Klemm, PDGC of District 141

141 Report: Interview with Mike Klemm, PDGC of District 141

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Dave Lehive gets District 141 President and Directing General Chair Mike Klemm on record with updates and news on negotiations, COVID recovery and vaccinations, and other hot topics. This 141 Report is a must-see! 

141 Report: Interview with Mike Klemm, PDGC of District 141

Dave Lehive gets District 141 President and Directing General Chair Mike Klemm on record with updates and news on negotiations, COVID recovery and vaccinations, and other hot topics. This 141 Report is a must-see! 

We begin with Mike telling his story about how he “grew up” at JFK Airport in New York City and first became a Shop Steward at Local Lodge 1322 in 1999. He was elected Grievance Committee Representative two years later, and in 2006 won election as Committee Chair for JFK and LGA. He was later elected Assistant General Chair of District 141, becoming President and Directing General Chair in 2015. 

The conversation goes right into contract negotiations, beginning with the successful joint collective bargaining agreement signed with American Airlines 18 months ago. That agreement raised the bar for wages, benefits, and work rules for the entire airline industry, earning the highest rate of approval for ratification of any contract in the history of District 141. 

Assistant General Chair Tony Gibson is leading negotiations with Spirit Airlines, seeking improvements to the first contract reached with that carrier. The process is expected to continue through the fall. 

We move on to Hawaiian Airlines, where ongoing expedited negotiations are modeled after the successful process that was used with United Airlines in 2016. Delays due to COVID restrictions have slowed down the process, and both sides differ on key issues, such as wages, benefits, job protections, and scope. Mike is looking forward to a quick resolution at the next scheduled meeting in the next 4 to 6 weeks. If an agreement is not reached, the union will end expedited negotiations and will proceed to negotiations per Section 6 of the Railway Labor Act, which sets the legal framework for collective bargaining in the airline industry. 

United Airlines presents the biggest challenge to successful negotiations because of the airline’s business model, which relies heavily on business and international travel – two areas that have been the slowest to see a post-COVID recovery. United is still operating fewer flights and offering lower fares than in 2019, although executives predicted a return to profitability in the third and fourth quarters of 2021. These factors, along with the new executive leadership at the airline, require a careful assessment of conditions before jumping into a full negotiations process. The negotiations were paused in 2020 due to COVID restrictions, and to dedicate resources to protecting jobs and scope during the pandemic. 

Mike reminds us that United enjoyed the highest profits in its history before the pandemic thanks to the hard work and dedication of Machinists Union members. District 141 plans to survey members before deciding if expedited negotiations are still the best alternative to reach an industry-leading contract that rewards that hard work. Negotiators will evaluate how many issues need to be addressed to have a more defined agenda before a planned meeting with United negotiators in the fall. 

Klemm also comments on United’s policy announced today that will require all US-based employees to be fully vaccinated against COVID by October 25, 2021. As an incentive, the company is offering a paid day off for employees who upload vaccination records to the United intranet before September 20, 2021. 

Today’s announcement reverses Kirby’s statement he made in January of this year when he said, “I don’t think United will get away with and can realistically be the only company that requires vaccines and makes them mandatory. We need some others…to show leadership, particularly in the healthcare industry.” District 141 stands by the position shared with members at that time, encouraging incentives, not mandates. “We expected better collaboration between United’s executives and the airline’s unions on this critical issue. Clearly, we are working with a different regime, the Oscar Muñoz style of management is over,” said Klemm.

In related news, contract negotiations with Flagship Facility Services in SFO progressed quickly under the leadership of AGC Troy Rivera and members there ratified a contract in June. 

Brother Mike Klemm leads the largest district in the IAMAW, which has doubled its membership numbers since 2008, when most of the executive board members took office. Yet, the leadership is focused on the needs of every member and returns every call and answers every email. The efforts of district officers to date have saved the jobs of 29 members who were wrongly terminated in 2021, with 1,200 jobs saved since 2008. They have also won over $190,000 in bypass and back pay in 2021, and close to $3 million since 2008. 

Dave and Mike describe how every department in the District serves an important function for members, from Safety to Education, Legislative and MNPL, Community Service, and EAP.

During Klemm’s tenure, he has led a team that has implemented the GSAP safety program at American, has made member education available to all locals, has increased fundraising to support our allies in elected office, and is currently expanding community service programs so they serve the needs of the communities where our members live. The Employee Assistance Program serves members facing many mental health issues besides alcohol and drug abuse that have become more prevalent during the pandemic. And the Communications team keeps everyone informed because an informed union member is a powerful union member. 

Finally, Mike and Dave speak about the importance of organizing and how it relates to everything District 141 does. Non-union carriers like jetBlue and Delta spend millions every year to keep out unions because they know we will negotiate a seat at the table, respect, and a better quality of life for workers. When we negotiate contracts, they set a higher standard for non-union workers as well. 

“Could you imagine how powerful we would be if everybody in the airline industry was in a union?” asks Mike, in a call to action. 

There’s no time to waste, we have work to do. 

United Airlines to Require Employee Vaccinations (Survey)

United Airlines to Require Employee Vaccinations (Survey)

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United Airlines to Require Employee Vaccinations (Survey)

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Reversing his earlier promise not to be the first to issue vaccine mandates, United Airlines CEO Scott Kirby announced that all US-based employees must be vaccinated against COVID-19 by this fall.

This move by United was poorly communicated to Union Members, and reverses earlier promises.
Today’s announcement reverses Kirby’s statement he made in January of this year when he said, “I don’t think United will get away with and can realistically be the only company that requires vaccines and makes them mandatory. We need some others…to show leadership, particularly in the healthcare industry.”

District 141 stands by the position shared with members at that time, encouraging incentives, not mandates. “We expected better collaboration between United’s executives and the airline’s unions on this critical issue,” said IAMAW District 141 President, Mike Klemm. “Clearly, we are working with a different regime, the Oscar Muñoz style of management is over,” said Klemm.

Ramp, Gate, and Ticket Counter workers will need to upload proof of vaccination.
United workers can upload an image of their vaccination card on the United employee’s FlyingTogether website. For most employees, once it’s been recorded, it will be stored in “My Info” near your Payroll Advice and W2 forms. 

When will I need to have my vaccination records uploaded?
You should upload your vaccination information to Flying Together as soon as possible. The deadline to have records on file is five weeks after September 20, 2021, or five weeks after the FDA gives the vaccine full approval, whichever comes first. The latest possible date for having your vaccination records on file is October 25th, but the FDA is expected to grant full approval status much sooner – which means that waiting until October 25th may be a bad idea that could result in disciplinary action. If you’re vaccinated, please upload your vaccination records right away. 

What are the incentives for getting vaccinated?
Since vaccines first became available, the IAMAW has been working with airlines to develop incentive programs to encourage employees to get vaccinated. At airlines like United, this has led to things like on-site vaccination clinics, time off from work, and educational outreach efforts. Now, United is offering an extra day of pay for those who get vaccinated. That means additional hours will be added to your paycheck, based on how many hours you are scheduled to work. That’s free money to do something that can save you and those around you from getting seriously hurt or killed by this virus.

Companies can legally require vaccines, and airlines have been doing it for years.
In December, the Equal Employment Opportunity Commission (EEOC) ruled that requiring employees to take a COVID vaccine does not violate the Americans With Disabilities Act (ADA). Legal experts are in broad agreement that employers may require vaccines for those who want to do certain jobs and to reduce risks to customers and their workforces.

Many companies already require vaccinations and other job-related medical examinations. Medical staff, teachers and students, workers in the adult industry, and military service members are a few examples of occupations where vaccinations are required to protect employees from diseases. Airlines have been requiring vaccinations for employees such as pilots and flight attendants for years.

As for the COVID vaccines specifically, airlines may not have a choice whether to require vaccinations, especially those carriers that fly to international destinations. Many countries are drafting requirements for everyone traveling in or out of their borders, including vaccinations. As this happens, anyone traveling to those areas will need to get vaccinated against COVID – both passengers and flight crews alike.

How will the company handle employees that refuse to get vaccinated?
The United announcement was not explicit on repercussions for workers that refuse to follow the new guidelines. However, it seems clear that vaccinations will soon be a requirement for anyone wishing to hold a position at United Airlines in the US. Vaccinations are now considered to be a safety requirement at the airline. Actions by employees that affect safety can result in discipline.

Any disciplinary action will be subject to the standard Grievance Process.

Employees with specific disabilities and sincerely held religious beliefs may have additional legal rights that employers must respect. The EEOC can offer further guidance and legal assistance.

Both SARS-CoV-2 vaccines currently available are safe and effective in preventing the transmission of COVID-19.
Before becoming available for public use, each COVID vaccine goes through extensive testing and oversight. They must pass rigorous clinical trials, meet stringent federal guidelines, and undergo continuous monitoring for side effects, allergies, and any other problems.

All available vaccines in the US are currently approved by the FDA for emergency use. Full FDA approval is anticipated in September 2021. 

All FDA-approved COVID-19 vaccines available today are proven safe and effective against the coronavirus. However, the CDC recommends that anyone who had an anaphylactic (life-threatening) reaction to the first dose of a COVID-19 vaccine should not have a second dose. It also advises anyone who is allergic to any ingredients in COVID-19 vaccines to not get vaccinated. Any employees who fall into those categories should be exempted from any vaccine mandate. These allergies have arisen in a tiny number of recipients, but no fatalities or severe reactions have been recorded.

None of the approved COVID-19 vaccines have resulted in widespread health concerns; from clinical trials to real-world use. No fatalities or serious injuries have been reported from the millions of injections that have occurred so far. In contrast, the coronavirus has killed more than 615,000 people in the US, and thousands more are suffering from long-term effects as a result of contracting the deadly disease.

In recent years, anti-vaccine sentiments have become popular in some groups, but there is no scientific basis for vaccine panic.

Widespread vaccinations against COVID will help achieve the “herd immunity” to the virus that is necessary for the airline industry to carry enough passengers and return to profitability over the next few years… and the only way that most airline workers will remain safely employed.

More information about the safety of vaccines is available from Johns Hopkins University.

Without mass vaccinations against COVID-19, airline work will become extremely precarious. Anyone working at any airline could suddenly find themselves out of a job.
Since the pandemic was declared in March 2020, travel has plummeted from more than 2 million passengers a day to a low of below 90,000. Over a year later, air traffic is still at lower than typical levels. Airlines have asked for billions of dollars in supplemental government aid so they can survive while the pandemic rages worldwide. In spite of all that help, more than a dozen airlines have declared bankruptcy, resulting in thousands of jobs lost permanently. Even with vaccinations widely available, mask mandates, COVID testing, and other measures, commercial aviation is in a precarious position.

The COVID vaccines are a lifeline for US airline workers. However, it could still take months to fully vaccinate 350 million Americans and end the pandemic once and for all. For airlines, the sooner Americans get immunized on a mass scale, the sooner airlines can recover. 

What are your thoughts on this topic? Do you support or oppose mandatory vaccinations for airline workers? Let us know by completing this short survey:

 

Recent Articles

Our View: Airlines Slowly Returning to Profitability Thanks to PSP

Our View: Airlines Slowly Returning to Profitability Thanks to PSP

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Our View: Airlines Slowly Returning to Profitability Thanks to PSP

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Airlines are rebounding. This is due to many factors, not least of which is the taxpayer-funded Payroll Support Program. This legislation covered the wages for airline workers so carriers could keep them on standby for a quick recovery after the pandemic subsides. 

American Airlines reported a net profit of $19 million for the Second Quarter, becoming the second of the “Big Three” airlines to do so. Delta has announced earnings of $652 million in Q2. 

American, Delta, and United all received taxpayer aid intended to preserve their workforces during the pandemic in amounts that exceeded their posted profits.

United Airlines reported a net loss of $400k, falling short of returning to profitability in the second quarter, for a net loss of $1.3 billion. However, United expects to return to profitability sometime during the summer travel season. United has launched aggressive programs intended to dramatically grow the airline, including hiring 25,000 new employees by 2026. 

Delta’s profits of $652 million seem impressive but are almost entirely due to one-off events to raise cash and a taxpayer infusion of $1.5 billion. Without these revenue-boosting efforts, Delta would have posted a net loss in the second quarter of $678 million. Delta is struggling to attract new customers, with passenger counts stuck at around half of pre-pandemic levels.

Delta has shed workers in large numbers despite the massive taxpayer assistance intended to preserve the hard-to-replace airline workforce. 

All of the Big Three airlines accepted billions in taxpayer aid through the Payroll Support Program (PSP), a part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act approved by Congress in March 2020. The funding was renewed in two subsequent COVID relief bills in December 2020 and March 2021. The PSP was designed to keep well-trained airline workers on standby during the pandemic so they do not find other jobs and slow a future economic recovery. All of the Big Three airlines seem to have reduced their workforces and saved those taxpayer-funded wages instead, which they have used to boost cash flow and profits. 

However, Delta is unique because the airline relies more heavily on low-wage, non-union contractors to perform many functions of its operations. These workers have been slow to return to these employers, opting instead for better-paying union jobs at other airlines or in other industries. This slow pace in rehiring is stalling Delta’s financial health. 

American Airlines’ revenue in the second quarter topped $7.5 billion, representing an 87% increase over the previous quarter. As with the other airlines, American was pushed “into the black” by way of PSP assistance. 

Without the PSP support, American would have posted a loss of over $1 billion in Q2. 

Passengers are indeed returning to American Airlines; the carrier has attracted back 70% of pre-pandemic flight loads, accounting for $6.4 billion of the overall $7.7 billion in total revenue accumulated. 

Final Thoughts:
An alliance of unions and airlines backed the Payroll Support Program, arguing that airline workers are difficult to hire and train quickly. A staffing shortage in the airlines would slow any post-pandemic economic recovery, and so these workers needed to be maintained at taxpayer cost until the companies could restart normal operations. Since none of the airlines have returned to 2019 passenger levels, it begs the question as to why chronic staffing shortages are hitting airlines so hard. It seems that the misuse of this assistance is one of the principal driving forces behind airline profits and near-profits in the second quarter of 2021. Lawmakers did not intend for this aid to simply be converted into taxpayer-funded profits. Lawmakers expected this funding to prevent post-pandemic staffing shortages and speed the recovery of commercial aviation and the larger economy, while preventing mass layoffs in the industry. 

The Machinists and Aerospace Union called out airlines for misusing PSP funding and solicited the help of dozens of lawmakers to redirect this critical assistance to the workers it was meant to help. Together, we successfully prevented involuntary layoffs and furloughs, including the involuntary demotion of full-time workers to part-time shifts. The fact that airlines could successfully reduce their staffing levels after accepting PSP funding should not be seen as a failure of our efforts as a union. Instead, it is evidence of how determined they were to take PSP funding for themselves. Our strength and solidarity undoubtedly created the success that we enjoy today. 

Nevertheless, airline profits are not the enemy of airline workers. The return of passengers and potential future profits is a good sign and evidence of the strength of commercial aviation in our nation. This strength, if sustained, promises to yield benefits in time to union members and the United States economy overall.

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Union Jobs Are Available

Union Jobs Are Available

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Union Jobs Are Available

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According to recent studies, a majority of the 157 million active American workers would like to have a union job. According to a survey by the Pew Research Center, majorities view employee-run associations and unions favorably and see the decline of unions as a worrying trend.

It’s not surprising. Union workers are pretty much the only employees that still have access to an actual pension. Union wages are prized by all employees everywhere, and union members can only be fired for a good reason, not for “any reason or no reason” like everyone else.

But, scoring a union job with union wages, union work rules, and a union pension isn’t easy. Anti-worker laws are rampant and can be very effective in preventing union organizing. Simplifying this process is one reason millions of working people in the US support the ‘Protecting the Right to Organize Act’ (PRO Act). 

Therefore, the quickest and surest way to hold a union job is to get hired at a union workplace.

And unionized companies aren’t hiring. And union workers don’t quit; they retire. So, not a lot of job openings are out there.  

Despite the Payroll Support assistance that Congress gave to airlines to preserve their workforces through the pandemic, airlines have somehow shed so many workers that they cannot operate at 2019 levels. Hundreds of flight cancellations have plagued the industry over the spring and summer, as the virus began to recede and travelers returned to the air. Chronic shortages at major stations, notably Denver, have resulted in significant employee and passenger consternation. 

In response, United Airlines CEO Scott Kirby has announced plans to hire some 25,000 new agents over the next few years. The move will increase the number of union jobs at some of the airlines’ biggest stations, easing critical staffing shortfalls and allowing new growth, including adding about 150 new flights to the winter schedule. 

The new union positions will happen all around the country. The biggest winner is expected to be at Uniteds’ Newark, New Jersey hub, which will add a stunning 5,000 new jobs. Close behind is San Francisco, which will add 4,000. Denver, Chicago, Washington Dulles, and Los Angeles will all see 3,000 new union positions.  

The new union workers will start work under several contracts, depending on their work areas and positions. However, virtually all of them will qualify for eventual top-out wages that soar to over $30/hour. Thanks to a historic agreement between the International Association of Machinists and Aerospace Workers union and United, their jobs will be almost impossible to outsource. They will qualify for flight benefits that allow reduced-cost air travel for them and their families. Importantly, they can become beneficiaries of a true union pension – meaning that they will be getting paychecks for the rest of their lives if they end up retiring from the airline. 

While American Airlines has yet to announce specific plans to add a similar level of new hiring, the company has begun recalling workers who had taken voluntary leave and has already started an aggressive program to attract in-flight crews. This new hiring includes calls to hire and return to work thousands of flight attendants and pilots, all of whom will be union workers. 

The new hiring will add more than $100 million in new union wages for United and American Airlines workers by 2026.

Cover Photo Credit: United Airlines / Inside Photo Credit: IAMAW District 141

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United Airlines’ Chicago Hub is Renewing Travel Restrictions

United Airlines’ Chicago Hub is Renewing Travel Restrictions

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United Airlines’ Chicago Hub is Renewing Travel Restrictions

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Exploding Delta Variant case numbers in several regions of the US has caused the City of Chicago to impose a new round of travel restrictions.

Starting last Friday, people traveling into the city from Missouri and Arkansas will have to provide a negative COVID-19 test or quarantine for ten days after arriving in Chicago. 

The restrictions are important to airline workers because Chicago’s O’Hare airport is a central hub for several airlines and the headquarters for United Airlines.

The restrictions began over the weekend. 

City officials said the restrictions will be imposed when a state has more than 15 daily infections per 100,000 people. Other states with climbing infection rates could also be added, including Nevada, Utah, Louisiana, and Florida. 

As of Friday, the city’s public health department began sending warning letters to violators, but no fines have been imposed so far. The department stated travelers who continue to ignore the restrictions will face significant penalties.

On Monday, airline stocks worldwide fell as fears that the Delta variant could trigger renewed travel restrictions. 

The airline industry was among the hardest-hit sectors of the economy in 2020 as the COVID-19 pandemic ravaged global markets. The Delta variant is proving that the sector remains uniquely vulnerable. 

Demand for air travel has exploded since spring, completely reversing the near shut-down of 2020. Staffing shortages and signing bonuses have largely replaced layoffs and retirement packages for most airline workers. However, it is dawning on a growing number of investors that the pandemic isn’t over – and could be about to take a very dark turn thanks to vaccine hostility and rising case counts.

Shares of United stock fell 5.5% on Monday, and American dropped by 4.1%. Boeing shares fell by nearly 5%. Together, these three aviation-sector companies employ the largest share of Machinists and Aerospace Union members. 

Meanwhile, concerns related to the Delta variant are delaying plans to release restrictions on international travel, a significant source of revenue for airlines. The Centers for Disease Control recommends that travelers avoid flights to the UK. Plans to remove similar restrictions for the European Union and India have stalled, worrying airlines further. 

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