JulesWinfield

One of the strings attached to the government bailout money is preventing job actions or furloughs until September. Airlines are taking different strategies. It seems like Southwest is going to reject the money and possibly furlough now, whereas other airlines are going to take the money and furlough later.

If the money is just buying us a few months of time, wouldn't have been better spent elsewhere? Most people are thinking travel demands won't be back to where they were pre-covid for a few years, so furloughs and layoffs are going to happen.

Wipeout

You do realize the 25 billion worth of grants is only allowed to be used for payroll. The airlines can’t use that portion for other “areas”. Also the grants don’t have to be paid back. Are you advocating for putting people out on the street earlier?

rickair7777

If the grant money covers the cost of keeping everyone, then it's almost a no-brainer...

Keep the staff, generate good will with employees and anyone else who cares (congress?), and be in a position to ramp up very quickly if things suddenly turn around.


If the grant money is not enough to cover the cost, then they have to look at how much will come out of pocket, how much cash they'll have on Oct 1, and whether it's worth it to be ready for a hypothetical but very uncertain or unlikely upturn in Q4.

Then they have to compare that with how much they can save with immediate slash-n-burn furloughs.

The grants don't have to cover 100% of payroll costs, but they probably have to cover a big part of it.

iPilot

I could very well see Southwest or other single-fleet LCC's just skipping the grants and going straight to furlough. For example Southwest would have minimal training impact and could argue that its better to preserve its cash and quickly shrink so that it will be in position to capture market share on the other side.

On the other hand you have the Legacies with complex fleets, even more complex union contracts to navigate and extremely poor cash situations. In their case it might be a necessity to take all the money they can get just to avoid liquidation in a matter of weeks. However, I'm sure the legal teams are pouring over the legalese of the loans and grants to look for every available loophole.

Lastly, they could be using this no-furlough time-out to retrain and prepare the pilot group for what comes Oct. 1. For instance they can run a displacement bid throwing every potential furlough onto the junior fleet with a class date of October. They sit out the summer and when the airline is legally able to they just furlough those guys. Everyone else gets retrained over this summer as much as possible. Depending on how desperate the situation at the major the displacement and retraining might not even be done by then but you just work with what you got and try to save as much money along the way as possible.

Finally, and this really is the worst case scenario: they go bust. They renege on the terms of the grants and use the courts to rip their contracts to shreds and just do what they want. What's Congress going to do, demand its money back? It would not be a tough argument to make that the viability of Delta, United, AA will hinge on being able to lay off outside the seniority list to save training costs. The union would cry to high heaven of course but behind closed doors if they're presented with the alternative being oblivion, they might just have to take it. Lets hope not!

JulesWinfield

I'm not taking a position either way, but it does seem foolish to spend 25 billion to just delay the inevitable. We're all flying around empty airplanes and losing money on every flight. At some point, we need to realize that it isn't sustainable, right?

RAHkid94

I’d rather have 4 months of pay before going into unemployment and would appreciate it if my employer had the decency to do that after they profited off my labor for years.

rickair7777

Worth noting that BK is not as "safe" for management now as it was pre-2007 (the rules changed).

The creditors, not the DIP/management team is more in the driver's seat. Last time BK was a convenient way to shed inconvenient obligations while still keeping your management job. This time it would be far riskier for the bosses, my gut feel is that they'll avoid it if they can, ie won't go there just to enhance future profitability, but rather only if they're near danger of liquidation.

Peacock

Theres no shortage of dumb takes, but here’s another

WHACKMASTER

Where are you getting this nonsense from?

JulesWinfield

https://www.dallasnews.com/business/...rim-workforce/