Tag Archives: furloughs

Furlough for FedEx Drivers due to slowing economy

Revelations 18:23:’For the merchants were the great men of the earth; for by thy sorceries were all nations deceived.’

Important Takeaways:

  • FedEx Freight to begin driver furloughs Sunday
  • The voluntary furloughs will run until March 6, with drivers getting a guarantee to return to work, the unit confirmed.
  • FedEx Freight is offering drivers a $300 weekly incentive to accept a furlough.
  • FedEx Freight said earlier this month that it would move to voluntary furloughs in seeking to align its driver workforce with less demand for LTL services due to a slowing economy.

Read the original article by clicking here.

U.S. opens $3 billion aviation manufacturing wage subsidy program

By David Shepardson

WASHINGTON (Reuters) – The U.S. Transportation Department said Tuesday it had launched a $3 billion aviation manufacturing payroll subsidy program that will cover up to half of eligible companies’ compensation costs for as long as six months.

The program, funded by Congress, requires companies to commit to not conducting furloughs without employee consent or laying off employees covered by subsidies during the six-month period. Applications must be filed by July 13.

Companies eligible include aircraft, engine, propeller or component manufacturers and companies that repair or overhaul airplanes and parts.

The subsidy program cannot cover more than 25% of an employer’s total U.S. workforce as of April 2020 and can only cover employees with total annual compensation of $200,000 or less.

To qualify, a company must have involuntarily furloughed or laid off at least 10% of its total workforce, or have experienced at least a 15% decline in 2020 total operating revenues.

More than 100,000 jobs have been lost in the aerospace industry since the start of the COVID-19 pandemic, according to the Transportation Department. Before then, the U.S. aerospace industry was estimated to employ approximately 2.2 million workers, including 1.2 million who worked in various parts of the supply chain nationwide.

Boeing Co, which has had extensive job cuts, Raytheon Technologies and Spirit Aerosystems did not immediately respond to questions about whether they are considering applying. General Electric’s aviation unit said it would not seek assistance from the program.

The International Association of Machinists and Aerospace Workers had strongly urged Congress to fund the program.

Congress has provided assistance to other aviation industry firms, including giving U.S. airlines $54 billion for payroll since March 2020 and that funding will continue to pay much of airline workers’ salaries through Sept. 30.

(Reporting by David Shepardson; Editing by Chizu Nomiyama and Cynthia Osterman)

U.S. budget airlines plot pandemic breakthrough

By Tracy Rucinski

PALM COAST, Fla. (Reuters) – The COVID-19 pandemic has reshaped the global travel landscape and U.S. no-frills carriers are pouncing.

As legacy airlines shrink to contain costs, budget carriers Spirit Airlines, Allegiant Travel and privately-owned Frontier Airlines are resuming pilot hiring and expanding networks to seize turf dominated by larger rivals.

The three airlines’ combined U.S. market share, which barely topped 10% before the pandemic, could grow by 10 percentage points this year alone, said René Armas Maes of UK-based consultancy MIDAS Aviation.

“Ultra low-cost carriers want to attack head-to-head; they believe they’re in a better position to rebuild travel demand,” he said.

Las Vegas-based Allegiant has told prospective pilots whose hiring was halted as the pandemic unfolded: “We have recalled all of our furloughed pilots and are now planning for exciting growth opportunities.”

Spirit and Frontier have posted pilot job ads and are taking delivery of Airbus A320neo jets that could open longer routes, including coast-to-coast flying traditionally controlled by legacy, or full-service, carriers.

By contrast, American Airlines has gone from hiring 100 pilots a month before the pandemic to threatening 1,850 furloughs without fresh government assistance on labor costs.

Allegiant also stands to benefit if Congress approves a third round of COVID-19 payroll relief for U.S. airlines, but “would be just fine without it,” Chief Financial Officer Greg Anderson told Reuters.

“The leading indicators suggest that there is a nice growth trajectory for Allegiant,” said Anderson, citing Google searches, indices that track changes in city populations and infection and vaccination trends from the Institute for Health Metrics and Evaluation.

He said customer surveys also show an increased preference for smaller airports and non-stop flights, cornerstones of budget carriers’ business models.

TRIAL AND ERROR

Ultra low-cost carriers, or ULCCs, offer a no-frills experience at rock-bottom fares and charge heavily for extras like bags. They wage fare wars and are pervasive in Europe’s fragmented market but have lagged in the United States.

ULCCs are a tier below carriers like Southwest Airlines, which pioneered the low-cost concept in the 1970’s and has grown to become the leading domestic airline. It provides free beverages and checked bags but keeps costs low in part by flying a single fleet-type of Boeing 737’s.

U.S. mainline legacy carriers American, Delta Air Lines and United Airlines have diverse fleets that include expensive wide-body jets geared for the kind of business and international travel that has suffered most in the pandemic.

American’s unit costs excluding fuel, a key metric of efficiency, were $0.18 per available mile in 2020, more than double that of budget rivals like Allegiant, according to data compiled by financial services firm Raymond James.

This means Allegiant, which primarily uses second-hand planes and only flies on peak travel days like weekends, can more easily profit on discount fares.

And whereas legacy carriers use a hub-and-spoke network that shuttles people through costly big-city airports, the ULCC business model is based on point-to-point travel to smaller airports where they outsource much of their infrastructure.

Allegiant’s fixed costs account for just around a quarter of its total.

That flexibility helps budget carriers open new routes on a trial-and-error basis. During the pandemic, for example, they have pivoted toward beach and mountain destinations.

“Then if the route is not performing, they won’t hesitate to shut it down,” said George Dimitroff of consultants Ascend by Cirium.

But there are risks.

American, United and Delta have also shifted flights during the pandemic to pick up leisure demand and their market power and geographical reach remain formidable.

Competing with them can lure upstart airlines into relaxing cost discipline – a move described as a “path to hell” by budget airlines entrepreneur Bill Franke, who championed the ULCC model.

Together the three large airlines control around 60% of domestic travel and could chase away rivals on smaller routes if they choose, industry critics said.

But they are more burdened by debt than the ULCCs and continue to burn through millions of dollars every day, hampering their ability to grow, the critics said.

BUDGET SHIFT

Beyond low fares, experts said the pandemic has given budget carriers a fresh argument for previously wary customers.

Traditional airline perks like catering services have lost their luster in an era of masks, and budget airplanes feature the same hospital-grade aircraft filtration systems as others.

And they could benefit from more cost-conscious small and medium sized businesses changing travel policies to favor lower-cost airlines, albeit constrained by their more limited flying through large hubs.

“More price-sensitive travel will be the new normal for the next couple of years at least,” Armas Maes said.

Even so, today’s outsiders will face a competitive cycle.

After the last downturn, low-cost carrier JetBlue Airways grabbed market share from American on the U.S. east coast. Now it is grappling with competition from ULCCs and is teaming up with its old rival.

(Reporting by Tracy Rucinski; editing by Barbara Lewis and Nick Zieminski)

Delta pilots vote for pay cuts in deal that avoids furloughs through 2022

(Reuters) – Delta Air Lines Inc pilots voted in favor of a deal that avoids furloughs through Jan. 1, 2022 in exchange for pay cuts, a union representing the pilots said on Wednesday.

The 1,713 Delta pilots, who were expected to be furloughed on Nov. 28, will now receive a partial pay of 30 hours a month along with medical benefits and vacation accrual, while they stay off their jobs.

“I don’t think there is any better way to welcome in the Thanksgiving season than with the achievement of protecting all our pilots from furlough,” Delta’s head of flight operations John Laughter said in a memo addressed to employees.

The airline industry has been hit hard by the coronavirus outbreak that brought travel to a near halt, with Delta and other airlines left scrambling to cut costs and boost liquidity as sales plunged.

“This agreement will help Delta navigate the COVID crisis and emerge a stronger airline in the end,” Delta MEC, a unit of the Air Line Pilots Association, said in a statement.

(Reporting by Ankit Ajmera in Bengaluru; Editing by Devika Syamnath and Amy Caren Daniel)

Top U.S. airlines starting 32,000 furloughs as bailout hopes fade

By Tracy Rucinski and David Shepardson

CHICAGO/WASHINGTON (Reuters) – American Airlines and United Airlines, two of the largest U.S. carriers, said they were beginning furloughs of over 32,000 workers on Thursday as hopes faded for a last-minute bailout from Washington.

Both airlines told employees, however, in memos seen by Reuters on Wednesday that they stood ready to reverse the furloughs, which affect about 13% of their workforces before the pandemic, if a deal was reached.

Tens of thousands of other employees at those airlines and others including Delta Air Lines and Southwest Airlines have accepted buyouts or leaves of absence aimed at reducing headcount as carriers battle a health crisis that has upended the global travel industry.

U.S. airlines have been pleading for another $25 billion in payroll support to protect jobs for a further six months once the current package, which banned furloughs, expires at midnight EDT.

Earlier, U.S. Treasury Secretary Steven Mnuchin said talks with House of Representatives Speaker Nancy Pelosi had made progress on a bipartisan aid plan, although no deal was reached and Senate Majority Leader Mitch McConnell called a $2.2 trillion coronavirus relief proposal “outlandish.”

In a memo to employees, American Chief Executive Doug Parker said Mnuchin told him that he and Pelosi were continuing to negotiate on a bipartisan COVID-19 relief package that would include an extension of aid for airlines and could reach an agreement in coming days.

“Unfortunately, there is no guarantee that any of these efforts will come to fruition,” Parker said.

American will furlough 19,000 employees, including some 1,600 pilots. More than 13,000 United employees will be on furlough, but not any pilots following an agreement reached this week.

“Tomorrow, tens of thousands of essential aviation workers will wake up without a job or healthcare and tens of thousands more will be without a paycheck,” Association of Flight Attendants-CWA President Sara Nelson said in a statement that urged lawmakers to reach a deal.

Nick Calio, who heads the airline trade group Airlines for America, said earlier that the industry was still pursuing all potential avenues for new assistance as time runs short.

“People keep talking, but we need results,” Calio told Reuters. “We are hopeful but not confident about them reaching a deal on a larger bill.”

U.S. airline shares ended flat on Wednesday.

Weeks of intense airline lobbying has won over many but not all Washington lawmakers, while drawing attention to the plight of other pandemic-hit industries as the crisis persists.

U.S. airlines are operating about half their 2019 flying schedules and suffering a 68% decline in passenger volumes.

The impact of the coronavirus on travel may cost as many as 46 million jobs globally, according to projections published on Wednesday by the Air Transport Action Group.

Airlines have argued they need trained employees to help drive an economic recovery as the pandemic subsides. American Airlines’ Parker told CNN he believed one more round of aid would be sufficient.

(Reporting by Tracy Rucinski and David Shepardson; Editing by Peter Henderson and Peter Cooney)

U.S. House Speaker Pelosi to meet with top U.S. airline CEOs

By David Shepardson and Tracy Rucinski

WASHINGTON/CHICAGO (Reuters) – House of Representatives Speaker Nancy Pelosi will speak on Friday afternoon with the chief executives of top U.S. airlines, who are urging Congress to approve another $25 billion in assistance to keep tens of thousands of U.S. workers on the payroll past Sept. 30, sources said.

Pelosi and House Transportation Committee Chairman Peter DeFazio are expected to hold a 2:45 p.m. EDT (1845 GMT) call with the chief executives of United Airlines, American Airlines, Delta Air Lines, Southwest Airlines, JetBlue Airways, Hawaiian Airlines, Alaska Airlines and others, a Democratic aide told Reuters.

In an interview with NBC’s “Today Show” on Friday, American Chief Executive Doug Parker urged lawmakers to “come together and get it done. … We just need people to do what’s right. I know we’re better than this, and our people deserve better.”

At the end of this month, the $25 billion in federal payroll assistance airlines received when the coronavirus first began spreading around the world is set to expire.

Airlines and unions are now pleading for a six-month extension as part of a bipartisan proposal for another $1.5 trillion in coronavirus relief, while simultaneously negotiating with employees to minimize thousands of job cuts that are expected without another round of aid.

White House Chief of Staff Mark Meadows met with major airline chief executives on Thursday. He said President Donald Trump is also open to a stand-alone measure to aid airlines, though congressional aides say that is unlikely to win support given aid requests from so many other struggling industries.

American has said it plans to end service to 15 small communities without additional government assistance and furlough about 19,000 workers.

Air travel has plummeted over the last six months as the coronavirus pandemic has claimed nearly 196,000 American lives and prompted many to avoid airports and planes, seriously depressing airline revenues.

Congress also set aside another $25 billion in government loans for airlines, but many have opted not to tap that funding source.

(Reporting by David Shepardson and Tracy Rucinski; editing by Jonathan Oatis)

Delta, Southwest draw strong demand for pilot early departure deals

By Tracy Rucinski and David Shepardson

CHICAGO/WASHINGTON (Reuters) – Delta Air Lines and Southwest Airlines have each received strong demand from pilots for early departure packages aimed at slimming their workforces to weather the coronavirus pandemic, according to preliminary numbers.

The union representing Delta pilots said 2,235 pilots had volunteered for a voluntary early out program ahead of a Sunday deadline, up from 1,700 on Friday, when Delta told pilots it would avoid furloughs if they agreed to reduced guaranteed minimum pay.

At Southwest, around 24% of pilots and 33% of flight attendants have agreed to early retirement or long-term leaves of absence, a person familiar with the matter said.

There is a period for employees at both Delta and Southwest to rescind their decision, so the numbers are not final.

Delta and Southwest did not comment.

U.S. airlines, which received a $25 billion bailout in March to cover payroll for six months, are trying to encourage employees to accept voluntary exit deals in the hope of avoiding involuntary furloughs in the fall, when a government ban on forced job cuts expires.

They had hoped that air travel demand would recover by October, but have warned that bookings that began to rise from historic lows in May and June have now leveled off or even fallen due to a rise in COVID-19 cases in some parts of the country.

(Reporting by Tracy Rucinski and David Shepardson; Editing by Dan Grebler)

Southwest Airlines warns it may need job cuts without jump in travel

CHICAGO/WASHINGTON (Reuters) – Southwest Airlines Chief Executive Gary Kelly told employees on Monday it needs a dramatic jump in passenger demand or it will be forced to take new steps to reduce staffing.

Employees face a Wednesday deadline whether to participate in a voluntary incentive program to leave the airline. “Although furloughs and layoffs remain our very last resort, we can’t rule them out as a possibility obviously in this very bad environment,” Kelly said in a message to employees. “We need a significant recovery by the end of this year — and that’s roughly triple the number of passengers from where we are today.”

(Reporting by Tracy Rucinski and David Shepardson; Editing by Chizu Nomiyama)