9.6 C
New York

Airline unions urge carriers to not resume buybacks when bailout ban ends this fall


A United Airlines flight crew walks through the terminal at San Francisco International Airport on April 12, 2020 in San Francisco, California.

Justin Sullivan | Getty Images

The most important U.S. airlines are earning profits again. Labor unions don’t desire them to spend it on stock buybacks.

A condition of the $54 billion in federal aid that airlines received to pay staff through the Covid pandemic prohibited carriers from share buybacks. That ban is in effect through Sept. 30.

But in a campaign and public petition that launched Thursday, a few of the largest airline labor unions — representing greater than 170,000 pilots, flight attendants, customer support agents and other industry staff — are urging carriers to stabilize operations and spend money on staff before spending on buying back their very own stock.

“We won’t allow executives to send one dime to Wall Street before they fix operational issues and conclude contract negotiations that can ensure pay and advantages keep and attract people to aviation jobs,” Sara Nelson, international president of the Association of Flight Attendants, which represents some 50,000 cabin crew members, said in a release announcing the anti-buyback campaign Thursday.

The campaign can also be supported by the Association of Skilled Flight Attendants, Air Line Pilots Associations, International Association of Machinists and Aerospace Staff, the International Brotherhood of Teamsters, the Transport Staff Union of America, and the Communications Staff of America.

The 4 biggest U.S. carriers — Delta, United, American and Southwest — spent about $40 billion buying back their corporations’ stock between 2015 and early 2020, in response to S&P Global.

Not one of the 4 airlines responded immediately to CNBC’s request for comment.

Lots of the staff represented by the unions advocating against a resumption of buybacks are in contract negotiations with their carriers. Along with higher pay, unions are pushing airlines for more predictable schedules after last-minute airline travel chaos roiled plans for patrons and staff alike.

Flight delays and cancellation rates rose this 12 months after airlines struggled with staffing shortages that exacerbated routine problems equivalent to bad weather. “Every dollar that goes toward stock buybacks is a dollar that might have been used to cut back disruption by addressing understaffing, high turnover, excess additional time, and low starting wages,” said Richard Honeycutt, chair of CWA’s Passenger Service Airline Council.

Labor unions pushed lawmakers for the help package early within the pandemic in 2020, after initial opposition in Congress, a few of which was rooted in airlines’ share buybacks before the pandemic. “No blank check industry bailouts,” Sen. Richard Blumenthal, D-Conn., said on the time.

Despite a surge in bookings, a jump in costs including fuel and labor have taken a bite out of U.S. carriers’ bottom lines and their stock prices are trailing the broader market.

Those challenges could make it difficult for airlines to resume buybacks or dividends, that are also barred through Sept. 30, under the terms of the help package.

“Given the economic uncertainty and even perhaps operations which might be still not fully back to pre-COVID levels, we don’t expect any to initiate dividends or buybacks this 12 months,” said Savanthi Syth, airline analyst at Raymond James.

She estimated that the earliest that airlines would resume can be mid-2023, with Alaska Airlines and Southwest the most probably candidates amongst U.S. carriers.

The NYSE Arca Airline Index, which mostly tracks carriers in North America, is down about 21% up to now this 12 months, around twice as much because the S&P 500.

Get the latest Sports Updates (Soccer, NBA, NFL, Hockey, Racing, etc.) and Breaking News From the United States, United Kingdom, and all around the world.

Related articles


Recent articles