How the airline industry will fare without government support

Yahoo Finance’s Alexis Christoforous, Brian Sozzi, and Alexis Keenan discuss how the airline industry is faring amid COVID-19 with James Carlson of the International Association of Machinists and Aerospace Workers.

Video Transcript

ALEXIS CHRISTOFOROUS: The coronavirus pandemic has wreaked havoc on the airline industry. Major airlines, weeks ago, warned they would have to furlough more than 80,000 flight attendants and other airline workers once the $25 billion in government aid runs out at the end of this month. For more, we're joined by James Carlson of the International Association of Machinists and Aerospace Workers, along with Yahoo Finance's Alexis Keenan. Good morning to you both.

James, paint the picture for us. How bad could this get? How many layoffs are we talking about if the airline industry doesn't get support from the government quick?

JAMES CARLSON: Well, thanks for having me and good morning. The situation in the airline industry is dire. We have approximately 700,000 people working in the industry now. And if there is no relief package on its way on October 1, we're gonna see massive layoffs.

We're probably looking in excess of 250,000. And-- and that's airline jobs. And that's people that are working in the industry. But we're looking at a multiplying ripple effect on that because for every 100 airline jobs, there's about 300 other jobs that are supported.

Those are the folks that work at the news stands. Those are the folks that work at, you know, in the airport at restaurants, in the hotel industry. So massive lost to the airline industry, but great, great economic harm all around to come.

ALEXIS KEENAN: James, hi. It's Alexis here. Now, the union is concerned about another adverse economic effect.

And it's beyond the lost jobs initially. And you talk about a challenge that is specific to the airline sector, and that is bringing employees back to work because airline industry employees are not just like any job. So can you tell us about that and what you foresee if these mass layoffs do come into play and these workers have to get back to the planes, to the airport?

JAMES CARLSON: So yeah. That-- and that's a great question and-- and something that not a lot of people know about. So if we-- if we decide to cut the cord on the airline industry and these massive layoffs do occur, we expect-- and it's not-- not just organized labor. It's the airline executives and, you know, health experts around the world-- we believe that, you know, there will be a vaccine, and people will begin to travel again.

We believe six months is an adequate amount of time. And we think that [AUDIO OUT] industry can rebound within that time if a vaccine is available and ready. The problem is if the-- if we layoff 300,000 airline workers, airline workers aren't like workers that work in supermarkets, for example, where if you get called back to work, you could just come back to work. All you have to do is punch in and back to work.

We have been through extensive background checks. We have to get, for example, clearance through customs if we handle mail in the airport. We have to go through drug and alcohol testing, extensive training, flight attendants, pilots, mechanics, ground handling agents, customer service, fleet service.

This can take-- to bring an average airline worker back-- and think about if you have 300,000 people trying to get back or 200,000 people-- we're looking at months possibly. So if we have a rebound, we have a vaccine, and we have air travel that, you know, comes back, airlines aren't gonna be able to increase their capacity because no one's gonna be available to work. So that's gonna cause a great economic harm potentially. So we think it makes sense to-- to, you know, give-- give us more, give the industry more time, keep everybody ready to go, and then when-- and when demand rebounds-- which it will-- then-- then we'll be there and ready to serve the public like we have done for the past, you know, six months during this pandemic.

ALEXIS KEENAN: Now, James, the union is pushing for that six-month extension of these no furloughs. But is the union open at all to a compromise there? Would you be open to something less than six months perhaps?

JAMES CARLSON: Well, you know, we don't think that there's gonna be a rebound within the next couple of months, like, three months for example to the end of the year. We think we gotta get through the first quarter. Then, you know, if a vaccine becomes available, it can be distributed, and everybody will feel comfortable flying again.

So we do support six months. From-- from what we understand, there hasn't been any, you know, offer of three months. But six months would be the most effective.

BRIAN SOZZI: James, how concerned are you that one of the major airlines simply won't be around because of the pandemic?

JAMES CARLSON: Well, that is a concern. And if, you know, we don't act to-- to support this vital industry, we-- we could see a-- an airline go out. Airlines are in a better cash position than they have in the past.

They're in pretty decent cash position. They've raised a lot of money. But airlines burn through a lot of money. And if there is not demand coming back, they're gonna be in trouble over the long term.

ALEXIS CHRISTOFOROUS: What does that mean, James, for us travelers? And we just gonna have-- when we are ready to get back into the air, you know, are we just gonna have fewer and fewer options?

JAMES CARLSON: Well, you know, if we-- if we don't support the industry, what you-- what you will definitely see is a reduction in service, and-- and maybe no service in a lot of smaller communities, and definitely a cut in-- in frequency and service in larger communities. So, you know, and that's another reason why we need to be able to bounce back quickly. Because when demand returns robustly, we need to be in a position to be able to serve the public.

And by not being able to get people back for a couple of months, that's-- that's just not gonna cut it. And, you know, I would like to add, this-- this is about people. You know, my wife is a flight attendant.

I'm-- I'm off the-- I'm a ramp worker. I work for the union now. But a lot of my friends-- people aren't gonna be able to make ends meet. They're not gonna be-- they might, you know, not be able to pay their mortgage.

Importantly, they'll be separated from their health care during a pandemic. So this is a-- a major issue here. And, you know, we do have bipartisan support for this. And the-- you know, and airlines and the unions agree, but nobody can seem to get it done.

And we need Congress to-- to do their jobs and get it done because if they don't, we're gonna have a major problem on our hands. And from what we understand, Leader McConnell has [AUDIO OUT] the airline relief in the version of the Senate Relief Bill. And we call on-- on the Senate and Leader McConnell to do just that, to put this [AUDIO OUT] and let's get it done.

ALEXIS CHRISTOFOROUS: All right. We're gonna have to leave it there. James Carlson of the International Association of Machinists and Aerospace Workers. Thanks for being with us and best of luck to you and your colleagues.

JAMES CARLSON: Well, thank you for having me. And best of luck to you guys as well.