The beatings will continue until morale improves: Because of the panic over the Wuhan flu, the airlines are contemplating eliminating more than hundred thousand jobs as well as shrinking their fleets.
Unable to cut jobs or salaries while receiving grants to cover payroll, airlines will staff their typical summer peak largely as usual, even with millions of fewer travelers. But come fall, it could get ugly for employees. “We’re going to be smaller coming out of this,” Delta Chief Financial Officer Paul Jacobson told employees last month. “Certainly quite a bit smaller than when we went into it.”
The reversal of fortune comes as a shock for an industry that just last year was breaking passenger traffic records. Last week, the average number of U.S. daily passengers declined 96%, to 95,531, compared with 2.39 million last year, according to Transportation Security Administration data compiled by Bloomberg. United shares fell Monday after it gave a snapshot of the industry bloodbath triggered by the pandemic, projecting a $2.1 billion loss in the first quarter. Delta, American and Southwest Airlines Co. will release their earnings in the coming days.
Such anemic demand means that anything less than a robust rebound over the coming months will prompt airlines to cut more employees, jettison older aircraft and cut more salaries, which in turn could persuade more workers to depart. During the past two months, at least 87,000 employees—more than one quarter of the Big Three airlines’ workforce—have taken voluntary leaves, early retirement or reduced work hours.
Carriers face “the worst cash crisis in the history of flight,” with booked revenues down 103% year over year, according to industry lobby Airlines for America. Domestic flights are averaging just 10 passengers while international flights average 24, the group said. “We could see the airlines look to shed 800 to 1,000 aircraft, which could result in a reduction of 95,000 to 105,000 airline jobs.”
In this case, the government shut downs only have had an indirect effect. By panicking and overstating the threat from COVID-19, the authorities and the press have made people terrified of flying. Even if the shutdowns end, the airlines will not recover until the public decides it is safe to fly again.
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