Unions representing thousands of airline employees called on the executives of the major carriers to hold off on reimplementing stock buybacks until operations have improved and labor contracts have been ratified.
By Holden Wilen – Staff Writer, Dallas Business Journal
Aug 18, 2022
A group of labor unions representing airline workers has launched a campaign demanding the big four carriers improve their operations and agree to new collective bargaining agreements before reimplementing stock buybacks and dividends.
The airline industry received $54 billion in federal Covid-19 pandemic aid across three funding rounds to help cover labor costs. As a condition for receiving the funding, Congress prohibited the carriers — including Fort Worth-based American Airlines Group Inc. and Dallas-based Southwest Airlines Co. — from distributing dividends or buying back stock. Those restrictions will end on Sept. 30.
All four of the major airlines have returned to profitability. Delta Air Lines (NYSE: DAL) has been profitable for the last 12 months. American (NASDAQ: AAL) and Southwest (NYSE: LUV) both reported record revenue in the second quarter, in addition to quarterly profits. United Airlines (NASDAQ: UAL) also swung to a profit while posting its highest revenue in at least a decade.
Despite the positive financial numbers, the airline industry has struggled with a high number of cancellations as travel demand has recovered at a higher and quicker level than anticipated. U.S. airlines have already canceled more flights in the first half of 2022 than they did all of last year, according to the unions. The airlines and many of the unions are also engaged in negotiations that have at times become tense.
The airlines should focus on stabilization and people before putting money into the pockets of Wall Street investors, union executives said. Unions participating in the campaign include the Association of Flight Attendants-CWA, the Air Line Pilots Association, the Association of Professional Flight Attendants, Communications Workers of America, the International Association of Machinists and Aerospace Workers, the International Brotherhood of Teamsters, the Transport Workers Union of America and the Service Employees International Union.
APFA President Julie Hedrick called the current time a "critical moment" in the airline industry's recovery and said stock buybacks would "add insult to injury" for employees. APFA represents more than 28,000 American Airlines flight attendants.
"Our airlines are returning to profitability, and there is potential to keep growing in that direction," Hedrick said in a statement. "But growth will not happen without proper investment...When we invest in ways that make our passengers excited to return to the sky, stock prices will follow."
United, Southwest, American, and Delta spent more than $39 billion combined on stock buybacks from 2014 to 2019, according to the unions. The companies should not be allowed to restart stock buybacks until they end "operational chaos" by better aligning staffing and scheduling to meet demand and conclude labor contract negotiations.
"We paused the greed in aviation for a little while with legislative constraints tied to Covid relief,” Sara Nelson, president of the Association of Flight Attendants-CWA, said in a statement. "But the greed that ran rampant before Covid created a system that was already stretched thin with minimum staffing and high overtime hours. We can’t allow executives to send one dime to Wall Street before they fix operational issues and conclude contract negotiations that will ensure pay and benefits keep and attract people to aviation jobs."
United Airlines responded to the campaign, saying in a statement it remains focused on making financial investments to improve the company.
"Our highest financial priorities right now are restoring our balance sheet and investing in our employees and customers – most importantly by executing on our United Next plan which includes taking delivery of nearly 300 new aircraft over the next several years.“
Matt Miller, a spokesman for American, said the company has no plans for share repurchases as it looks to use capital to pay down debt.
"Our goal is to use any excess liquidity to pay off debt, as evidenced by our $15 billion debt reduction commitment, of which $5.2 billion has been actioned over the past 12 months," Miller said.
A spokesperson for Delta said the company plans to reinvest $6 billion in the business. The company increased base pay for its employees by 4% and provided profit-sharing payouts last year.
"Delta’s top financial priority is restoring its financial foundation by generating sustained and meaningful profitability and cash flow to support debt reduction and reinvestment in the business," spokesman Morgan Durrant said.
Southwest could not immediately be reached.
Southwest CEO Bob Jordan said at the company's annual meeting of shareholders in May that the company hopes to bring back dividends in 2023.
John Samuelson, president of the TWU, said any airline that chooses to buy back stock instead of investing in its workforce would be "not only irresponsible but untrustworthy."
"Airline CEOs need to know that the public is watching and that we won’t stand for their greed," he said.
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