CEOs from America’s largest publicly traded airlines sent an urgent letter Saturday to Congressional leaders promising to stop stock buybacks and paying dividends in exchange for a multi-billion dollar coronavirus bailout.
The letter says “If loans and or loan guarantees are enacted, equaling at least $29 billion, participating passenger and cargo air carriers commit to placing limits on executive compensation; eliminating stock buybacks over the life of the loans and eliminating stock dividends for the life of the loans.”
The letter signed by CEOs from Alaska, Atlas, American Airlines, Delta Air Lines, FedEx, Hawaiian, JetBlue, Southwest, United Airlines, and UPS was sent from the trade group Airlines for America.
“The breadth and immediacy of the need to act cannot be overstated,” the CEOs warned. “It is urgent and unprecedented.”
Growing cash crunch crisis
On Friday, Delta CEO Ed Bastian announced Delta (DAL) entered into a $2.6 billion secured credit facility, “enhancing the company’s liquidity as it manages through an unprecedented decline in air travel demand due to the COVID-19 outbreak.” Delta is already drawing $3 billion from its existing revolving credit facilities. Bastian told Delta’s 90,000 employees: “Maintaining ample liquidity during this crisis is critical to the essential service that Delta provides in America’s transportation infrastructure.”
United (UAL) has also lined up multi-billion dollar lines of credit to get through the crisis and announced more capacity reductions as it scrambles to cut costs. In a historic move, “the airline is reducing its international schedule by 95% for April. The revised international schedule will be viewable on united.com on Sunday, March 22,” according to a press release. That includes a temporary suspension of all flights between the United States and Canada, starting April 1.
Without billions of dollars from taxpayers, the airline CEOs threaten to layoff employees. “Unless worker payroll protection grants are passed immediately, many of us will be forced to take draconian measures such as furloughs,” they wrote in the letter to Congress.
In exchange for the bailout package the CEOs promised to save jobs through the summer, “If worker payroll protection grants are enacted, equaling at least $29 billion, participating passenger and cargo air carriers will not furlough employees or conduct reductions in force through August 31, 2020.”
But the airline CEOs told Congress that time is running out. “We urge you to swiftly pass a bipartisan bill with worker payroll protections to ensure that we can save the jobs of our 750,000 airline professionals.”
Adam Shapiro is co-anchor of Yahoo Finance’s On the Move.