OP-ED: Airline executives don't need a bailout—but thousands of flight attendants do. Here's why helping lift America's flight industry is the morally correct thing to do.

Airline executives don't need a bailout—but thousands of flight attendants do. Here's why helping lift America's flight industry is the morally correct thing to do.

Originally published in Business Insider on April 23, 2020 by Sara Nelson, AFA International President.

“Hold all other communications on pay cuts, base closures, and previously announced furloughs. United just called me. They’re furloughing another 2,500 Flight Attendants. We need to deal with that first.”

I’ll never forget that call. It was 2003, and our union was six months into a 38-month bankruptcy at United Airlines that followed September 11th. 
Nearly one in three United employees—30,000 all told—lost our jobs during that bankruptcy. Our pension was gutted. And those who remained took two massive pay cuts. When United came out of bankruptcy, nearly 45% of the savings the corporation showed Wall Street came off the backs of workers. 

Wall Street was ecstatic. Workers were devastated.
That time was the formative experience in my career. And it’s why I’m baffled to hear people claim that we should simply allow the airlines to fail during our current crisis.
Last week, venture capitalist Chamath Palihapitiya went viral when he claimed big investors would lose in an airline bankruptcy while workers would escape unscathed. “Let the airlines fail” has been echoed by everyone from former Obama advisor Jason Furman and former Labor Secretary Robert Reich.
Here’s where they’re right: we shouldn’t follow the old "blank check for corporations" bailout playbook, especially for airlines. Over the last 10 years, airlines spent 96% of their free cash on stock buybacks to pay out Wall Street and top executives, leaving them with little cash to weather this pandemic. That behavior doesn’t deserve to be rewarded. And under the relief package my union helped propose and win, airlines are explicitly banned from stock buybacks, executive payouts or even stock dividends until well after the aid has been paid back. At the same time, we negotiated something that’s never been done before: a workers-first relief package that guarantees no furloughs or layoffs and keeps paychecks and benefits flowing to two million aviation workers at least through September.

Even with this emergency relief, there’s a real possibility people like Mr. Palihapitiya will get their wish, thanks in large part to onerous conditions on the payroll relief imposed by Treasury Secretary Steven Mnuchin at the last minute.

I will fight like hell to prevent airline bankruptcies, no matter who cheers them on or why. I'll fight because of what I know from personal experience: the people who benefit if airlines go under are corporate executives, bankruptcy lawyers, and corporate management consultants who under corporate bankruptcy law get to walk away with hundreds of millions in bonuses.

But the biggest winners of all will likely be the private equity firms who buy a controlling stake in struggling companies. They use accounting tricks and loopholes to saddle companies with debt while paying themselves massive management fees and leveraging assets. When they’ve bled the company dry, they use bankruptcy code to break union contracts, cut pay and benefits, and lay off workers. Even more grotesque, these firms become the top priority creditor in line for repayment issuance of stock at bankruptcy exit. They often retain control of the companies on the other side of bankruptcy. With hundreds of billions in concrete assets like planes and route authority, airlines are prime targets for these vulture capitalists.

Bankruptcies will also bring more of what consumers hate. When the industry consolidated after past bankruptcies, airlines raised fees for baggage and ticket changes. They shrank legroom and started charging to pick your seat. If the industry shrinks again, the conditions in the air will only get worse.

I can’t speak to Mr. Palihapitiya’s motives, although as a tech billionaire who made his initial fortune at Facebook, he’s likely invested in the idea of “disruption.” But the kind of disruption that would stem from bankruptcy isn’t the kind we should cheer.

Many progressive voices seem to believe letting the corporations fail would allow us to re-regulate the industry or even nationalize the airlines. That’s something our union has promoted through sensible policy since de-regulation in 1979. But in our current political climate this is a high-risk gamble for the public --one that I’m not prepared to take.

Whatever the rationale, anyone cheering for airlines to fail is saying it’s OK for more than two million workers to suffer catastrophic loss. That’s simply not something we’ll let happen on our watch.

Aviation workers are essential employees. Right now, we’re working to deliver medical supplies and personnel. Although travel for business and pleasure has basically come to a standstill, there are still Americans who need to travel to deal with the most tragic consequences of this pandemic. And of course, when the virus subsides, aviation will play a critical role in helping get our economy off the ground again.

Our industry needs new rules of the road—just as we need across our entire economy. We need to rein in the greed and short-term thinking that helped put our entire economy on thin ice with nearly half the country living in poverty while a few billionaires push a charity society that looks more like the serf system of Elizabethan England. In a free country, we need policies that put working people’s interests first.

But we won’t get there by letting the airlines fail. That strategy will only mean devastation and pain for millions of workers and higher costs for consumers, while billionaire private equity managers and corporate CEOs pop bottles of champagne.


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