Workers at US’s Delta, Australia’s Qantas face furloughs, cuts

The coronavirus pandemic and its crushing blow to the travel industry is leading to mounting pressure on airlines to reduce jobs, with United States-based Delta Air Lines and Australia’s Qantas becoming the latest to announce plans to either sideline or cut workers.

Delta is set to furlough 1,941 pilots in October, the carrier said in a memo to employees that noted the fallout from the COVID-19 pandemic and plunging air travel demand.

US airlines warned they will need to furlough tens of thousands of workers once $25bn in US government stimulus funds run out in September. The aid, which covered employees’ pay, was meant to help them weather the pandemic and preserve jobs until a recovery, but travel remains depressed.

“We are six months into this pandemic and only 25 percent of our revenues have been recovered. Unfortunately, we see few catalysts over the next six months to meaningfully change this trajectory,” Delta’s head of flight operations John Laughter said in the memo.

He said the airline is “simply overstaffed”.

Atlanta-based Delta originally estimated a surplus of 2,558 pilots but reduced the number of involuntary furloughs following early retirement and voluntary departure programmes, a spokeswoman said.

But there were still roughly 11,200 active pilots on Delta’s roster, Laughter said, with only about 9,450 needed for the summer 2021 schedule, which the carrier expects will be the peak flying period for the next 12-18 months.

The Air Line Pilots Association, which represents Delta’s pilots, said it was “extremely disappointed” in the decision.

Pilots are the only unionised workgroup at Delta, which last month said furloughs could be avoided if pilots agreed to a 15 percent cut to minimum pay.

US airline unions, however, have been reluctant to negotiate pay cuts, having only recently recouped wages lost after the September 11, 2001, attacks and a string of bankruptcies and mergers that followed.

Peers such as American Airlines said they are trying to keep as many pilots as possible on board due to the costly and lengthy training required to bring them back in a recovery.

Airlines and unions have been lobbying Washington to extend another $25bn in aid to protect jobs through March, but talks are at a standstill.

Delta was among the carriers that agreed in July to federal loans under a $25bn programme, in addition to the $25bn in payroll aid they received under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. As part of the agreement, carriers that received state aid are barred from furloughing or laying off workers until September 30.

More misery at Qantas

Meanwhile, Qantas has announced a further round of redundancies.

The Australian carrier said it plans to cut up to 2,500 more jobs by outsourcing its ground-handling operations in Australia to lower costs as it braces for a 10 billion Australian dollar ($7.17bn) drop in revenue due to the pandemic this financial year.

The job cuts flagged on Tuesday are on top of 6,000 across its workforce announced in June, which would take its total job losses to nearly 30 percent of its pre-pandemic staffing.

Qantas’s head of domestic operations Andrew David said outsourcing ground handling jobs at the country’s biggest airports would save an estimated 100 million Australian dollars ($71.7m) each year in operating costs.

“It would match our ground-handling services with fluctuating levels of demand,” David told reporters at a briefing. “We know an external party can turn our aircraft at 40 percent lower cost than we can using our resources.”

It would also allow the airline to avoid investing 100 million Australian dollars ($71.7m) in equipment like tugs and bag loaders over the next five years by outsourcing the work to a specialist ground handler, Gareth Evans, Chief Executive of Jetstar, Qantas’s budget arm, said.

The executives did not name the firms that could be involved in the outsourcing, but major ground handlers in Australia include dnata, Swissport and Menzies Aviation.

Qantas shares were up 1.7 percent on Tuesday afternoon, compared with a 0.2 percent rise in the broader market.

As part of a union agreement, Qantas said it would also have to offer the opportunity for the 2,000 ground handlers at its main brand to bid for the work, though it will not have to do so at Jetstar.

The airline said it would complete its review over the next few months. Most of its ground-handling employees have been stood down from work for months and are receiving government aid due to the decline in travel demand.

Transport Workers’ Union National Secretary Michael Kaine, whose union represents the ground handlers, said in a statement the announcement of job losses was “utterly devastating”.