By Tracy Rucinski
(Reuters) – Delta Air Lines said on Wednesday it would record charges of up to $ 3 billion in the current quarter for purchase packages aimed at reducing costs and avoiding involuntary licenses in the fall.
US airlines are grappling with overcrowding as the coronavirus pandemic crushes demand for air travel, but the terms of a $ 25 billion payroll stimulus package issued by Congress in March prohibit them from forcing job cuts earlier October.
That has prompted a round of voluntary offers from large operators and warnings that the industry’s recovery will be slow, forcing them to shrink.
American Airlines employees prepared to receive license warnings this week, people familiar with the matter said Monday, while United Airlines has already sent warnings to 36,000 workers, or about 45% of staff.
In accordance with labor regulations, airlines must notify employees 60 days in advance of possible licenses. Not everyone who receives a notification will be fired.
Southwest Airlines Chief Executive Gary Kelly told employees this week that the number of passengers would need to triple by the end of the year to avoid job cuts. Any permit would be the first in the history of the low-cost airline.
Southwest, like Delta, has offered cash in its early retirement packages, which also include health and travel benefits.
By encouraging more high-level workers to leave, US airlines could cut their labor costs, their main expense, during the recovery, giving them more pricing power. Union union contracts require airlines to resign junior workers first.
Around 17,000 workers at Delta, which had more than 91,000 employees in 2019, opted for the purchase, and more than 45,000 are taking various unpaid short-term leave.
The deadline for Southwest and United employees to accept voluntary departure packages is Wednesday. American is expected to roll out packages for its employees when it sends leave notifications this week.
(Report by Tracy Rucinski in Chicago and Ankit Ajmera in Bangalore; Edition by Anil D’Silva and Steve Orlofsky)
