CARES Act Termination Date Could Mean Thousands of Layoff/Retirements

Airlines and MRO firms have a decision to make with the retirement dates of many on staff intersecting with possible loss of a furloughed employees.

The perfect storm is brewing which could reach its maximum impact in the fall.

The full impact relative to the termination of the Economic Security Act (CARES) plus the continuing reduction of manpower in all aviation jobs by most US based airlines will happen on September 30th. These positions   will soon be vulnerable to job losses, unless both aid and lay-off prohibitions are extended or carriers can fight their way back to fuller operations by fall. 

This is a problem that may have a mitigating factor; the job losses come at a time when retirements are at a peak, especially in skills related to maintenance and repair of aircraft. What it may all come down to is that the industry will still need to hire new people to repair and maintain airplanes. This does not change the threat of massive cuts in other areas. The question is, can the airlines stoke enough demand to avoid the cuts? 

Some airlines warned that they might have laid off 30-50% of their employees without the assistance provided by the Coronavirus Aid, Relief, and Economic Security (CARES) Act. 

Unions representing tens of thousands of airline employees asked lawmakers on Thursday for $32 billion in additional government aid to maintain their jobs through the end of March, as air travel demand remains low because of the coronavirus pandemic.

U.S. passenger and cargo airlines, as well as airline contractors, had $32 billion in federal aid to keep paying workers under the $2 trillion CARES Act that was signed into law in March. Terms of that aid prohibit the airlines from laying off or cutting the pay rates of employees through Sept. 30. Several categories of skilled workers are especially vulnerable to the termination of the act, and this is especially true of airline mechanics since many are on the cusp of retirement anyway.  

The near future may begin with discussion in Congress of a supplement to the original CARES act, and Congress is likely to begin negotiations on the next major coronavirus relief bill this month.  

The unions urged House and Senate leadership to pass “a clean extension” of the CARES Act, arguing that doing so would minimize additional applications or negotiations between the Treasury and airlines. 

Even with an extension, some air carriers are attempting to soften the blow of reducing headcounts by offering “golden parachutes”. 

Delta Air Lines has already crafted a package offering early retirement and voluntary separation to employees as the air carrier struggles with the impact of the coronavirus pandemic.

Chief Executive Ed Bastian said in a memo to employees that this week “the window opened for the 2020 voluntary departure programs.”  The last thing we expected this year was to be encouraging people to depart – 2020 was intended to be a year of growth,” Bastian said. The packages include cash severance payments, continued health care benefits, enhanced travel privileges, and career-transition support.”

“We hope to see enough participation in these programs to help us avoid the need for involuntary furloughs later this year,” Bastian said.

Joseph Alba
Mr. Alba was previously Editor of the Airport Press for 12 years covering both local as well as global aviation news. Prior to this, Mr. Alba had Executive positions in Systems Engineering and Marketing with IBM World Trade, and had foreign assignments in the Far East and Latin America earning three Outstanding Achievement Awards. Mr. Alba also directed a new function dealing with Alternate Fuels for Public Service Electric & Gas company in New Jersey and founded a Natural Gas Vehicle Consortium consisting of car company executives and fleet owners, and NGV suppliers in New Jersey. Mr. Alba was a founding partner of ATA, an IT Consulting company which is still active in Central and South America. After leaving the armed forces, Mr. Alba’s initial employee was the U.S. Defense Department as an analyst.

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