CEO of Airlines for America, Nicholas Calio, joins Yahoo Finance’s On the Move to talk about the struggles airlines are facing.
ADAM SHAPIRO: Yesterday when United Airlines announced that it would have to furlough 16,000 employees, now, there was a silver lining, because they had warned it could have been much worse– 36,000. But even 16,000, plus what American Airlines is saying– possibly 19,000– this is not a good time for the airlines. And recovering the airlines may actually– I’m going to use the term stalling, but the person who knows best is the CEO and president of Airlines for America. Nick Calio is joining us now to explain the status of what’s going on with airlines and the movement to get additional funding, which is bipartisan in Congress, to assist these essential businesses. Mr. Calio, where do we stand with the airline recovery at this point?
NICHOLAS CALIO: First of all, Adam, thank you for having me back. And where we stand with the airline recovery is in, frankly, a very bad place. We’re coming off the summer and into labor day, where the numbers should be up. They are not up. We’ve hit a plateau, and they’re not– there’s no sign that they’re going to move.
International travel is virtually nonexistent. On a day to day basis, domestic travel is 70% of what it was last year, and that’s just not a place where airlines can make a profit, invest in their people, and invest in their product. So we were hoping for a greater recovery than this, but the pandemic certainly has not been cooperating. And people are concerned about any kind of everyday activity.
You know, since this started, airlines have done everything they can to ensure the health and safety of their customers– as a few examples, the enhanced cleaning procedures, the electrostatic cleaning and flogging, the wipe-down procedures, the health requirement declarations that you have to submit to the airline before you get on the plane, face masks, which we are enforcing. It’s not voluntary. You can lose your rights to fly if you don’t wear the face mask.
That is– I heard the earlier conversation you were having– there’s no accounting for human behavior. Wearing a face mask it’s the simplest way to protect yourself and other people. So on our airlines, most of them, if you refuse to wear a face mask, you either don’t get on the plane, or after you refuse to wear it, you don’t get to fly that airline again.
ADAM SHAPIRO: Let’s talk– let’s talk about the efforts– I mean, it was Gary Kelly, who is the CEO at Southwest– and all the airlines are all making drastic changes to their business plans right now. But Southwest one of the stronger financially, and one of the airlines– and a couple of them are very well-run– he actually said to his employees in a video last week, we still need Congress to approve what they’re calling CARES Act 2– the potential for $25 billion, the extension of the CARES Act to help keep these essential employees on the payroll, or at least within benefits and not furloughed. What’s the status of getting that passed?
NICHOLAS CALIO: It’s very much up in the air. And Gary’s correct– you know, Southwest has announced that there won’t be any layoffs at least until the end of the year. But having talked to Gary, you know that beyond that, it’s very iffy, because you can’t sustain a business like an airline on the load factors that we’re having. We are very hopeful that Congress will come back, and Congress and the investigation will strike a deal that will include an extension of the payroll support program.
That gave us a lifeline earlier this year to keep our employees onboard. It was a simple pass-through. We got the money, we passed it on, and kept the employees on board. And as you know, Adam, airlines are a little different. You just can’t toss the keys to a pilot and say, start the airplane again, if he hasn’t been working for three months– same with flight attendants, same with machinists, and gate agents. It all requires training– constant retraining– and certification.
So there’s a lot of people unemployed in this country. There’s a lot of people hurting. We’ve done everything we can to avoid as many layoffs as possible. But it’s going to happen starting October 1, along with reductions in service. Flying is very different today. There aren’t as many flights. There’ll be even less flights in the future. We have a long road to recovery. And another– a lifeline to help keep these employees onboard board would actually save the government money in terms of unemployment insurance, Medicare, social security, a whole host of things.
Compass Lexicon did a study that showed that absolute benefits of the first CARES Act. So our fingers are crossed. We’re doing everything we can. But it’s all a question of whether Congress and the administration can come to a larger deal that helps not only the airlines and our employees, but more people beyond that. You would think that the imperatives of doing so– the economic imperatives and the political imperatives, for that matter– would make it a no-brainer. But apparently, that is not the case.
ADAM SHAPIRO: We’re going to let the people on Capitol Hill know that we have posted a story to the YahooFinance.com web page that talks about these latest stats from your trade organization, with recovery not anticipated 2019 levels to 2024. We have to say, thank you, right now to Nicholas Calio, Airlines for America CEO and president. We’re going to keep an eye on what happens with CARES Act 2.