May 20, 2020 | Airlines, American, COVID, Featured, Featured News, Front Page, Home, Home, MNPL, Uncategorized, United |
Shares of several airlines have seen a sharp increase in value over the past week, as more travelers begin a slow return, prompting carriers to add more routes and flights to their schedules. While overall demand remains at critical levels, we now have the first clear evidence that the airline industry is beginning to heal from the COVID pandemic.
In March, Congress approved $50 Billion in aid to airlines, to preserve the highly-trained (and difficult to replace) commercial aviation workforce. Congress also hoped to protect the larger civil aviation networks that provide life-sustaining economic connections throughout the American economy.
All major airlines have warned that absent another round of help from Congress, America will have a much smaller capacity for air transport and travel. Further, if the direst warnings coming from industry insiders are borne out, the American economy could lose more than a third of the entire civil aviation workforce in the space of just a few weeks starting in October.
Such a massive reduction in jobs would not only cripple any recovery this fall but would also have catastrophic ripple effects throughout the rest of the economy, as businesses that depend on airlines and air shipping lose access to critical parts of their business.
Last week, the industry got a few hopeful signs that air travel would return. United, American, and Delta are filling planes, and are considering adding back flights. Currently, airlines are only operating at certain times of the day, in schedules called “banks.” United and American have both reported that they are bringing back a few banks in select hubs that were stopped due to low demand. The latest round of inevitable social media outrage saw shocked Tweets revealing images of airplanes full of passengers. This may have horrified the Twittersphere, but it was cause for celebration for everyone that depends on air travel. Figuring out how to handle too many passengers is a good problem for airlines to have right now.
Along with passengers, investors are also starting to come back.
Shares of United Airlines Holdings Inc. were up 2% in premarket trading on Tuesday, extending a larger 21% rally for the week. The posting represents the largest gains since the COVID pandemic began hitting airlines two months ago.
United reported modest improvement and reduced cancellations during the second quarter, improvements that the company expects to continue through July.
American Airlines experienced a brief 9.2% surge last week, led by upbeat new data from TSA that indicates an increase in travel demand. That report detailed an uptick in passengers overall, showing an average of 205,010 passengers a day going through TSA security checkpoints. This is the fourth straight week that the agency reported an increase.
Overall air traffic is down more than 91% from last year, according to the TSA reports.
The largest transportation and aerospace union in the US is the International Association of Machinists and Aerospace Workers, which includes tens of thousands of airline personnel. IAMAW District President Mike Klemm warned the 38,000 members of District 141 that investor support and passenger demand might not return fast enough to prevent job losses in October.
“To be perfectly clear, if demand for air travel does not rebound before September 30, 2020, there likely will be furloughs at every single US-based airline,” Klemm said while promising that the union would prevent involuntary furloughs that violate union contracts and the terms of the CARES Act. IAMAW ramp and customer service workers successfully fought back a plan by United to force furloughs after accepting $5 billion in taxpayer money intended to prevent job losses.
The union is also proposing several cost-cutting measures to United, including ways to incentivize early retirement through medical bridges. These voluntary measures, along with increased demand for air travel, are welcome signs.
However, IAMAW District Legislative Director Dave Roderick is also suggesting that the union stay in constant contact with lawmakers. “We need to stay in the conversation,” Roderick said. “We need to make sure that our members of Congress understand the facts from the union perspective, which is the side that clocks in and out every day to put food on the table. We can’t afford to be passive at this moment. We need to stay engaged, and do whatever we can to impress on lawmakers the importance of passing another assistance package before October,” Roderick said.
May 13, 2020 | COVID, Featured, Featured News, Front Page, Home, MNPL |
May 12, 2020
Mr. Oscar Munoz
Chief Executive Officer, United Airlines, Inc.
PO Box 06649
Chicago, IL 60606-0649
Dear Mr. Munoz,
I am alarmed by United Airlines’ decision to eliminate 3,400 management and administration positions on October 1, 2020 and reduce approximately 15,000 full-time positions to part-time on May 24, 2020. These actions are not only devastating to the employees who will lose all or some of their income, but also violate the congressional intent behind the Payroll Support Program.
On April 15, 2020, United Airlines accepted $5 billion in taxpayer assistance via the Payroll Support Program, $3.5 billion of which will not need to be paid back. By accepting these funds, United Airlines committed to not reduce employee pay or benefits, or implement involuntary furloughs through September 30, 2020; to limit executive compensation and prohibit stock buybacks or dividends through September 30, 2021; and to protect collective bargaining agreements through September 30, 2020. This program was created to give airlines time and flexibility to adapt to changing economic conditions caused by the COVID-19 pandemic, and find ways to minimize layoffs.
I am concerned several recent decisions made by United Airlines potentially violate the requirements of the Payroll Support Program, and certainly violate the spirit of the law. United Airlines announced a planned 30 percent reduction of management and administration positions five months before the reduction can legally occur. While not illegal, the early announcement indicates that United Airlines is not using the time and flexibility provided by the Payroll Support Program to save jobs.
On March 27, 2020 you promised your employees that United Airlines would “not conduct involuntary furloughs or pay cuts in the U.S. before September 30, 2020.” Unfortunately, this commitment appears to have been misleading. United Airlines sent memos to over 11,000 employees, which included instructions requiring employees to take 20 unpaid days off before they are fired, and implementing mandatory hour reductions. Both practices reduce employee pay without consent, undermining your promise that taking care of employees will remain your number one priority.
Further, United Airlines announced on May 1, 2020 that 15,000 workers, including baggage handlers, customer service agents, and reservations agents, would transition to part-time work at the end of May. These employees were given 13 days to decide if they would accept their planned reduction to part time status, voluntarily leave their job without recall rights, retire with no recall rights, or choose to furlough with furlough pay and a right of recall. Not only does this supposed request reduce employee pay, in a potential violation of the Payroll Support Program, it presents employees with an impossible choice: struggle to pay the bills while taking home a smaller paycheck or try to collect unemployment and find a job in one of the worst labor markets in history. This choice is made even more difficult by the fact that most states consider unemployment applications from individuals who voluntarily left their jobs on a case-by-case basis, meaning the applications are more likely to be denied and take longer to process.
While I am glad that public outcry and pending legal action pushed United Airlines to make these mandatory hour reductions voluntary, I remain deeply concerned by your labor practices. I am particularly troubled by the statement that the originally proposed mandatory hour reductions will be implemented by late June if an insufficient number of employees volunteer to reduce their hours. The very act of threatening across-the-board schedule reductions makes the current ‘voluntary’ reductions anything but voluntary.
United Airlines Spokesman Frank Benenati was correct when he stated that it is not sustainable for the company to spend billions more than it takes in. However, it is also correct to state that a business model that spends 80 percent of free cash flow on stock buybacks, just as United Airlines has done for the last decade, is unsustainable. For years, the business prioritized increasing stock values for shareholders and top executives over saving and preparing for the next economic downturn. United Airlines would be less reliant on government assistance and would not have to push workers off the payrolls if company leadership focused on long-term sustainability instead of enriching themselves.
I urge United Airlines to honor the commitments you made to your employees and the American people by ending your efforts to cut employee hours and calling off the upcoming layoffs. We can only weather this crisis if all parties work together and act in good faith.
I look forward to your response.
Sincerely,
Joseph P Kennedy, III
Member of Congress
Please print and post on all IAMAW Bulletin Boards.
May 11, 2020 | COVID, Featured News, Front Page, Organizing, Row 2, United |
Mike Klemm, President and Directing General Chair of District 141 of the International Association of Machinists and Aerospace Workers, sits down with the Valley Labor Report to discuss labor issues in the airline industry.
Hosts David Story and Jacob Morrison asked Klemm to talk about how the union defeated an attempt by United Airlines executives to furlough and impose pay cuts and benefit reductions for 15,000 workers.
International Association of Machinists and Aerospace Workers’ District 141 President Mike Klemm told VLR show hosts David Story and Jacob Morrison that protecting jobs from mass elimination was something that could only be done through mass action; individual workers would always be outspent by their corporations.
The Valley Labor Report is a weekly radio program airing Saturday mornings on 92.5 WVNN based in Athens, Alabama. Listeners can tune in live at WVNN.com and on YouTube.
The full broadcast with IAMAW District 141 President Mike Klemm is available here.
May 9, 2020 | MNPL |
Congresswoman Jackie Speier (D-CA) called out United Airlines for its attempt to furlough thousands of front-line essential workers. The carrier tried the move after accepting billions of taxpayer dollars that it promised to use on payroll costs but reversed course after union opposition.
When the Coronavirus Aid, Relief, and Economic Security (CARES) Act passed Congress with overwhelming support, airlines like United lined up to get their share of the $50 billion in aid specifically allocated for them. The CARES Act directed air carriers to spend the money on payroll, which is a large portion of their operating costs, to help avoid bankruptcy at least until October. By then, they planned to draft a new relief bill or hoped a treatment for COVID-19 would be available.
The Federal aid came with strings attached. First, executives and shareholders couldn’t use it to increase executive and management pay, to boost stock buyback schemes, or invalidate collective bargaining agreements. Second, the money had to go towards paying their employees. Airlines, including United, promised not to cut pay and benefits until October.
“United will not conduct involuntary furloughs or pay cuts in the U.S. before September 30th,” United CEO Oscar Munoz said in a memo to United’s 100K employees on March 27.
On May 1st, International Workers Day, incoming United CEO Scott Kirby confirmed the involuntary furloughs of all US-based full-time ramp and customer service agents to part-time, resulting in pay cuts of at least 25%, effective on May 24 – nearly 5 months before October. Similar cuts to non-union administrative employees followed a few days later.
The $5 billion in payroll assistance is not enough to cover the full operating costs the airline faces, Kirby argued, so executives looked for loopholes and excuses to keep the money and ignore their obligations to use it to keep employees intact. According to Kirby, they were keeping the money and cutting back employee compensation and benefits five months before the agreed-upon October date. Kirby contends that, since executives wanted to cut pay by cutting hours, they were in “full compliance with the CARES Act” which forbids cuts in pay if the airline accepts taxpayer help. (Thanks to the CARES Act, labor costs are covered by taxpayers, not passengers.)
The immense outcry from passengers, unions, and lawmakers did not take long.
Just before United backtracked from the decision, Representative Jackie Speier (D-CA) released a statement calling out the plan to lay off thousands of workers, stating she was “dismayed” to learn of the move.
“Your company has agreed to take approximately $5 billion from the CARES Act Payroll Support Program. This includes a grant of $3.5 billion and a 10-year loan for $1.5 billion” the Congresswoman said a letter to CEO Oscar Munoz. “United itself acknowledged that the receipt of this federal government money ‘Will be used to protect the salaries and benefits of employees through September 30, 2020.’”
Congresswoman Speier noted in her statement that United executives “have announced the reduction of scheduled work hours by 25% for almost 1,600 United Airlines employees at San Francisco International Airport (SFO), effective May 24, 2020.”
Rep. Speier represents California’s 14th Congressional District, including the area adjacent to SFO Airport, one of the largest and most historic airfields in the US, and an important hub for United Airlines.
The furloughs at United would not have been mere hour reductions. As hourly workers, the benefits airline employees receive are tied to the total of hours worked. This means that a cut in scheduled hours would also reduce vacation and sick time accruals, holiday pay, pension contributions and unemployment insurance options. Amid a global pandemic, many would have lost eligibility for Family and Medical Leave Act protections, plus other benefit programs which vary state-by-state.
“This is not the way to protect the salaries and benefits of these 1,600 employees and their colleagues throughout the country,” Rep. Speier said. “United contends that this 25% reduction in work hours does not violate the CARES Act because their hourly rate of pay did not change. I find that position disingenuous and not in the spirit of the CARES Act. These workers will have a 25% reduction in their gross incomes,” the Congresswoman said.
Congresswoman Speier has been a strong supporter of United’s unionized ramp and customer service workers for years. In 2013, she worked to protect the Maintenance Operations Center at SFO. That facility is one of the largest on the West Coast and employs 3,500 workers.
The ramp and customer service agents that United attempted to furlough are represented by the International Association of Machinists and Aerospace Workers. The IAMAW is the largest union of aerospace and transportation workers in North America, with members at all major airlines, and at NASA, Boeing, Lockheed Martin and Bombardier.
“We are overwhelmed with the support we are getting from lawmakers like Rep. Speier,” said IAMAW District 141 President and Directing General Chair, Mike Klemm, in a statement. “To have the authors of the law support and amplify our position is priceless. I want to thank Rep. Speier and all the legislators and public officials who have reached out to us this week. We appreciate you.”
Klemm also praised the grassroots, bi-partisan advocacy efforts from front-line union members. “Our members at United have proven they are tireless defenders of this industry, their passengers, and their fellow union members. What our union does when we are all working together is extraordinary. I want to thank our union’s essential workers, and our AGC’s and elected officers, who are stepping up in an incredible way through this crisis.”
SFO Airport is the proud home of IAMAW District 141 Local Lodges 1781 and 1782.
The full letter is available HERE>
