Airline CEOs face Senate panel over flight cancellations after taking $54 billion in taxpayer help

An American Airways airplane lands at Ronald Reagan Washington Nationwide Airport November 23, 2021 in Arlington, Virginia.

Drew Angerer | Getty Photos

Airline executives will face questions from a Senate panel on Wednesday about flight disruptions and staffing shortfalls regardless of the $54 billion in taxpayer help they took to assist cowl labor prices throughout the Covid pandemic stoop in air journey.

The CEOs of American Airways, United Airways and Southwest Airways, and Delta’s chief of operations will say that the help helped them survive the disaster and that they are now ramping up hiring, in accordance with written testimony for the listening to of the Senate Committee on Commerce, Science, and Transportation.

Committee members are more likely to ask airways how ready they’re for the approaching months and about pending refunds to prospects, which has been a significant criticism from vacationers.

“Whereas we’ve seen journey stabilize throughout the U.S., the Omicron variant of COVID has demonstrated the continued volatility of the pandemic,” Delta’s chief of operations, John Laughter, mentioned in written testimony.

U.S. airways misplaced a report $35 billion final yr however executives say the Payroll Help Program, which prohibited them from shedding employees, was a bridge to get them to the purpose when air journey demand began to get well in earnest.

“It isn’t an exaggeration to say this system saved the airline business, which Congress and the administration acknowledged as vital infrastructure that’s as important to the economic system as it’s distinctive,” American’s CEO, Doug Parker, wrote in his testimony.

Southwest CEO Gary Kelly mentioned of the Payroll Help Program: “I can sum up the PSP in two phrases: IT WORKED,” in accordance with his written testimony that was launched forward of the listening to which begins at 2:30 p.m. ET.

Alaska Airways CEO Ben Minicucci mentioned in written remarks that by “protecting workers on employees, it lowered the time that may have been required to coach individuals coming again to work – an effort that takes months and important sources.”

Whereas airways that accepted the help could not lay employees off, they considerably lowered head rely by urging workers to take voluntary measures like buyouts, leaves of absence or quickly idled employees in alternate for lowered pay. The payroll help was principally within the type of grants that do not have to be paid again in addition to some loans.

Staffing shortfalls

Staffing shortfalls exacerbated routine issues, like unhealthy climate, and contributed to tons of of flight cancellations when journey demand took off this yr. Airways say they’re including employees as rapidly as doable to cater to the rise in air journey.

Sen. Maria Cantwell, D-Wash., the committee’s chairwoman, in July wrote to main airline executives, elevating issues about staffing issues’ function in flight disruptions. “This reported workforce scarcity runs counter to the target and spirit of the PSP, which was to allow airways to endure the pandemic and preserve workers on payroll in order that the business was positioned to seize a rebound in demand,” she wrote.

In ready remarks forward of the listening to, Cantwell mentioned the committee will hear from business leaders on whether or not the help labored. She mentioned the payroll help stored airline employees on the job and helped airways enhance service. “For those who take a look at how the airline workforce was retained, how rapidly flights had been restored and the increase aviation gave to the US economic system the reply is sure.”

At Dallas-based Southwest, 15,200 employees, or 25% of its employees, accepted a voluntary program, with 4,500 of them leaving the corporate completely. It now goals to rent 8,000 workers in 2022 on prime of 5,000 new employees this yr.

American mentioned its hiring purpose is eighteen,000 subsequent yr after including 16,000 in 2021.

Some 17,000 Delta workers took buyout packages and 40,000 volunteered for non permanent leaves of absence. Thus far this yr, it has added 8,700 workers, a few of them beginning at decrease pay charges in contrast with extra skilled workers who opted for buyouts.

“We’re getting a pleasant juniority profit as we herald a complete new technology of workers at basically each degree of the corporate,” CEO Ed Bastian mentioned Oct. 13 on a quarterly name. “We had shut to twenty,000 individuals retire a yr in the past, so the highest finish … a lot of our most skilled workers have chosen to retire, and that is opened up alternatives for youthful individuals.” Bastian mentioned the corporate hasn’t modified its pay scales.

United Airways, together with Delta, has been extra conservative about bringing again flights than American and Southwest.

“After dramatically chopping our flight schedule firstly of the pandemic, we knew it might be difficult to convey flights all again directly, so we made the choice to progressively add flights over time,” United CEO Scott Kirby wrote in his testimony. “Whereas this alternative sacrificed short-term earnings, it allowed us to make sure a dependable service and to largely keep away from the widespread operational challenges skilled by different carriers.”

Sara Nelson, president of the Affiliation of Flight Attendants, who labored intently with airline executives and lawmakers to get the payroll assist authorised, can also be scheduled to testify in entrance of the committee. She known as for elevated protections for cabin crews which have confronted a surge in unruly and at occasions violent passengers.

“The very last thing we’d like, particularly earlier than the December holidays after coping with all the stresses on the frontlines of this pandemic for 2 years, is a false narrative concerning the [payroll support] program,” learn her written testimony. “Unfounded controversy breeds contempt for aviation employees merely doing our jobs to maintain everybody secure.”

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