Airline CEOs face Senate panel over flight cancellations after taking $54 billion in taxpayer aid
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A Senate panel will question airline executives Wednesday over flight disruptions, staffing shortages, and the $54Billion in taxpayer assistance they received to cover labor costs in the slump that hit air travel.
Chief Executive Officers American Airlines, United Airlines, Southwest AirlinesAccording to the written testimony submitted by the Senate Committee on Commerce, Science, and Transportation, the chief of operations at Delta will testify that the assistance helped them weather the crisis and they are now increasing their hiring.
Members of the committee will be asking airlines what their plans are for the next months.
John Laughter, Delta’s chief operations officer, stated that travel stability has been achieved across the U.S. “While there have been no deaths in the U.S. so far, Omicron COVID has shown the volatility of this pandemic.”
U.S. airlines experienced a staggering loss of $35B last year. However, executives believe that the Payroll Support Program was an important bridge which allowed them to reach the stage when there was real recovery in air travel demand.
American CEO Doug Parker testified that “it’s no exaggeration for Congress to claim the program saved an airline industry which Congress recognized as critical infrastructure that was as important to the economy and as unique as any other.”
Gary Kelly, Southwest CEO said that the payroll support program worked. According to his written testimony released before the hearing at 2:30 PM. ET.
Although airlines who accepted aid could not lay off workers, they were able to reduce headcount significantly by asking employees for voluntary measures such as buyouts or leaves of absence, and temporarily inactive workers, in return for lower pay.
In this year’s boom, staff shortages led to many flight cancellations and exacerbated other routine issues, such as bad weather. According to airlines, they will be adding as many staff members as possible in order to meet increased demand.
Southwest, based in Dallas, saw 15,200 workers accept the voluntary program. This represented 25% of their staff. Southwest had 4,500 employees who left permanently. In 2022, it plans to employ 8,000 people in addition to the 5,000 employees that were hired this year.
American stated that its goal for hiring 18,000 people next year, and 16,000 by 2021.
One hundred and fifty-seven thousand Delta employees were offered buyouts, while 40,000 volunteers for short-term leaves. The company has already added 8700 people this year. However, they have started at lower salaries than the more senior employees who chose buyouts.
Ed Bastian, CEO of Bastian Communications said that they are getting a good juniority benefit by bringing in a new generation of employees at all levels. We had nearly 20,000 people retiring a year back, so we’re getting a nice juniority benefit as we bring in a whole new generation of employees at essentially every level,” CEO Ed Bastian said on oct. 13. Bastian stated that the company’s pay scales have not changed.
United Airlines has, like Delta, been much more cautious in returning flights than American Airlines and Southwest.
Scott Kirby, CEO, stated in testimony that “after dramatically cutting our flight schedules at the beginning of the pandemic”, it became difficult to get all flights back on time. Although this decision was costly in the short term, it enabled us to provide reliable services and avoid many of the operational problems faced by other airlines.
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