US President Trump has approved the country’s second stimulus package, of which $15 billion will be allocated to the airline industry.
This is in addition to the $50 billion domestic carriers got earlier this year in the form of payroll support.
Airlines which receive a slice of government aid will not be allowed to furlough employees before the programme expires on March 31. They are also required to recall employees who were previously furloughed, while limiting executive compensation and stock buybacks.
In October, domestic carriers including American Airlines and United furloughed 32,000 employees, including flight attendants, pilots, and mechanics, after the first round of funding expired, according to CNBC.
Last month, budget carrier Southwest Airlines also warned that it could furlough employees for the first time in its 49-year history if no action was taken, reported Bloomberg.
“As I’ve been saying for months, [government stimulus] was always our preferred plan, and it means we can stop the movement toward furloughs and pay cuts that we previously announced,” said Southwest CEO Gary Kell in an employee update this week.
“The new law will provide payroll support for all Southwest employees through March 31, 2021. Given this, we currently do not anticipate the need to conduct any furloughs or pay cuts next year.”
Although demand remains well below pre-pandemic levels, airlines will be obligated to restore flights to smaller communities served prior to the pandemic.
In addition, at least one major US airline believes that traffic will not rebound significantly before the aid package lapses in March, serving only as a stopgap measure.
“United has been realistic about our outlook throughout the crisis, and we’ve tried to give you an honest assessment every step of the way,” said United CEO Scott Kirby and President Brett Hart in a message to employees.
“The truth is, we just don’t see anything in the data that shows a huge difference in bookings over the next few months. That is why we expect the recall will be temporary.”