American Airlines CEO: U.S. COVID-19 aid ‘saved’ industry

8:39 pm Monday, December 13th, 2021

By David Shepardson

WASHINGTON (Reuters) -American Airlines Chief Executive Doug Parker will tell a U.S. Senate committee that $54 billion in COVID-19 U.S. government assistance “saved the airline industry,” according to testimony seen by Reuters.

Parker is set to testify alongside the chief executives of Southwest Airlines and United Airlines on Wednesday. Delta’s chief of operations will also testify.

Parker will tell the panel that had Congress structured the entire assistance as government loans most airlines “would have survived by shutting down flying in April 2020, furloughing almost all of our teams, and waiting for demand to return to levels strong enough to justify restoring flying. As it turns out, that would have been some time in 2021.”

Lawmakers are expected to quiz executives about how carriers used pandemic-related federal aid, staffing issues and other matters.

Parker will also say the airline has “set a target of hiring an additional 18,000 team members in 2022.”

Lawmakers want to know if voluntary employee buyouts offered by airlines, despite receiving payroll assistance, caused operational problems at some carriers that have resulted in the cancellation of hundreds of flights in recent months.

American Airlines canceled more than 1,400 flights over a weekend in October citing staffing issues and unfavorable weather.

Parker will note the airline has “developed incentive pay programs for peak travel periods to fortify our efforts to operate every flight on our schedule.”

In total, Congress awarded three rounds of government assistance to the airlines that lasted through Sept. 30.

Airlines receiving government assistance were not allowed to issue involuntary layoffs or cut worker pay. They also had to limit executive compensation and halt share buybacks and dividend payments.

U.S. air passenger travel fell by 60% in 2020 to the lowest level since 1984, down more than 550 million passengers.

The U.S. government also extended $25 billion in low-cost loans to airlines. Of the $54 billion in payroll grants, U.S. Treasury required larger airlines to repay 30% and award the government warrants.

(Reporting by David Shepardson; Editing by Chris Reese and Stephen Coates)