Airline industry battered by the coronavirus pandemic

“Even though the volume of this displacement is enormous, and its impact on the lives of many of our pilots significant, none of us should believe it solves all of our problems,” wrote Bryan Quigley, senior vice president of flight operations in a company email. “This displacement bid aligns pilot staffing to a schedule reduction of around 30%, yet our schedule in May, and our expected schedule for June, is reduced by 90%.”

Quigley further warned that “no one knows when travel demand will return.” Because of that uncertainty, “the results of this displacement are likely to be a baseline from which future displacements [aka, layoffs] are conducted.”

Large layoffs would already be a reality if not for the recent government bailout bills. Domestic airlines took in billions of dollars in aid in partially forgivable loans. Two conditions of that aid were no layoffs or furloughs until Oct. 1.

United’s slashing of more than 4,000 pilot jobs will be accompanied by almost 3,500 layoffs of white-collar jobs. Other airlines are expected to follow suit with more layoffs.

In a first-quarter earnings call, American Airlines CEO Doug Parker talked about an early retirement and leave offer that the company made to employees, which is still permissible under bailout rules. 39,000 employees took American up on that, he said.

Parker said American would like to avoid involuntary furloughs, ideally. And Gregg Overman, a spokesman for the pilots union, told the Washington Examiner, “We’re going to do our best to help him achieve that.” But Parker also emphasized the need for American to be “rightsized, properly sized, a good bit smaller than it is today.”

Southwest Airlines spokesman Brian Parrish told the Washington Examiner that his company is “proud that we’ve never had a pay cut or furlough in our 49-year history, and the goal is to maintain that precedent.”

Still, like the big three US airlines — American, United, and Delta — Parrish said that Southwest “recently received disbursements from the CARES Act, which provides direct payroll support and protects the jobs of more 60,000 Southwest employees through Sept. 30, 2020.”

No. 4 airline Southwest is better prepared than the big three to weather a travel downturn. As of the end of last year, American had $33 billion in debt, United $20 billion, and Delta $17 billion, according to business data site Statista. In contrast, Southwest had to shoulder only $4 billion.

But the bottom line is that with the coronavirus in the air, no one knows when people will resume flying in large enough numbers for airlines to get some sense of what the future looks like. In addition to restrictions on furloughs and layoffs, federal bailout strings have kept airlines from cutting routes.

This must-keep-route stipulation has resulted in many planes flying virtually empty. It has also resulted in a huge number of canceled flights on those routes, which creates a vicious circle. Even people who are willing to fly are not convinced that the flights will be there when they need them.

Doug Gibson is a civil service worker for the federal government from Utah. His whole family booked flights through Expedia to a family vacation condo in Kaposvar, Hungary, in July, on carriers American and Finnair. Not only have the flights been canceled, but the family has spent thousands of dollars and is uncertain if, or when, they will get any of that money back.

“We purchased flight insurance from Expedia, but it seems to not cover something like coronavirus,” Gibson told the Washington Examiner.

The great uncertainty of when things will return to normal or what that will look like means fewer replacement planes are needed. Facing dismal sales prospects, Boeing has announced layoffs and buyouts for 16,000 of its workers.

“The demand for commercial airline travel has fallen off a cliff,” Boeing CEO Dave Calhoun said in a memo to Boeing workers outlining the bad news.