Assoc of Flight Attendants Pres.: We're looking at job losses as steep 90% in the industry

President of the Association of Flight Attendants-CWA Sara Nelson joins Yahoo Finance’s Zack Guzman to discuss the outlook on the airline industry and how workers are coping amid the coronavirus pandemic.

Video Transcript

ZACK GUZMAN: Of course, we got the big jobs number this morning that was worse than the expected number. More than 700,000 jobs lost for the month of March, and we're continuing to see that play out in the markets right now.

But a big piece of that number is a big question of, how much of this $2 trillion stimulus bill is going to be making sure that that number does not continue to decline moving forward? Of course, a piece of that $2 trillion stimulus bill was money that is slated to go to airlines-- obviously, a big industry, employs a lot of Americans here. And a piece of that was $25 billion in grants and $25 billion in loans.

Now flight attendants are urging federal officials to make sure that that money goes to the airlines contingent on not government stakes in those companies, taking government stakes in that company-- in those airline companies, as Secretary Mnuchin has said that he is wont to do, and making sure that the money does get to workers and prevent job losses there.

And for more on that, I want to bring on our next guest. Sara Nelson is the president of the Association of Flight Attendants-CWA, a union representing nearly 50,000 flight attendants across 20 airlines. And she joins us now on the Hangout.

And Sara, first up, I guess, you know, there was a sense of celebration when this first passed because it's a lot of money to be going to an industry that was no doubt hard hit here. But what are your reservations right now on the way it's being handled and the way you want to protect your union workers?

SARA NELSON: Sure, Zack. Well, as you're talking about the unemployment numbers, let's think back two months ago. The airline industry was planning to hire over 100,000 workers this year. We were celebrating massive profits, and United Airlines was going to set up a training academy and pump a bunch of money into this.

Now we're looking at job losses as steep as 90% in the industry. This is 2 million jobs on the line here. So what we did was put together a package that has $25 billion that is dedicated to going straight through to people's payroll. This has never been done before in history, and that's what we were celebrating last week is that for the first time ever, corporations are told it has to go to the workers first-- not only the workers first, but only the workers for that $25 billion.

The equity stake can be on the loans that the airlines can get for the rest of their operation, and that's perfectly fine and appropriate. But what's happening now is that Secretary Mnuchin is threatening to put an equity stake on the payroll grants. And if you put any kind of financial instrument on a grant, it's no longer a grant.

If you give a grant to a student, you're expecting that that student is going to repay by their contributions to society from their learning, just like these payroll grants are supposed to keep people on the job. The return to the American taxpayer is that we don't have 2 million people added to those unemployment lines. We have 2 million people who are continuing to pay taxes and continuing to contribute to the economy, and also staying in their jobs in a critical industry to be able to lift off again.

So Mnuchin is making this very complicated when it doesn't need to be, when we have so many other issues going on. And out of the $2 trillion that was allocated to try to give relief to the country, 1.25% is the only amount that was dedicated directly to payroll to keep people on the job. That's in the airline industry, that's what we did, and that's what we're trying to make sure works so that it can be used as a template for other industries as well.

ZACK GUZMAN: Yeah, and it sounds like you have the support, at least from what we hear from House Speaker Nancy Pelosi, coming out and saying that, yes-- I mean, especially if you're considering that there might be a phase four here and more money needs to be thrown at the problem and making sure workers are made whole. There are questions she's raising about why you would want to hold up some aid going there.

But to his point, I mean, we've heard Secretary Mnuchin talk about airlines in terms of, you know, companies that had received money in the past. We saw that with the auto manufacturers back in the financial crisis. When we're talking about making sure the government and taxpayers aren't going to be left out to dry if some of these companies fail, there were questions there raised when you're talking about the loan amounts. And Nancy's-- House Speaker Pelosi was also on board with that as well when we look at making sure these companies don't furlough workers and don't increase rates of pay for executives, as well as making sure they don't buy back shares.

There were stipulations in some of that, but, I mean, I guess the question becomes-- you're kind of damned if you do, damned if you don't here, as you're saying, if the companies don't want to get that grant money. I mean, have you been hearing from executives in the industry saying whether or not they can go it alone? Is that even an option on the table right now?

SARA NELSON: Look, it's not an option. And let's look at all the reporting from the airline industry. When I say 90% of the people don't have work right now, that should ring some bells here. OK? After 9/11, the highest jobless amount that we had in the airline industry was 20%.

This is something we haven't seen in a hundred years. This is a crisis we haven't seen in a hundred years. And the airlines were doing quite well, but they were the first ones hit with this pandemic, had to start pulling down flights in January and have started to feel that.

The money is going out the door so fast that if they don't get this federal relief package right now, which is why we're telling Mnuchin not to slow this down-- if they don't get this right now, they're not going to have enough to meet payroll in another month, and then the entire industry collapses. And we don't need that right now when, actually, the industry is still providing really important service to our communities so that people can have of goods and services and we can move medical professionals into the hot spots so we can address the virus.

So I want to be really clear-- there is an equity stake on the loans, and that is appropriate. But let's not confuse that with what the grants are intended to do. This is instead of having people in the unemployment lines, keeping them in their jobs and participating in our economy, paying taxes. And actually, we have a study that says that it's a wash. The $25 billion in payroll grants comes back in taxes and other contributions to our economy by keeping people on the payroll.

This is what Denmark is doing. This is even what Boris Johnson's UK is doing right now. It's about freezing the economy, keeping people in place. It's the fastest way to get money to people. You don't have to deal with what you were talking about with the small businesses, adding the banks involved here.

Think about it this way. If United Airlines-- and they do-- employ 88,000 employees and you send those 88,000 employees to the unemployment line, so the government has to interface with all of them or just has to interface with United Airlines and tell United Airlines how to spend that money to get it directly to those workers, what is an easier process? That is the more administratively sound process. It's the simple process, and it also keeps people participating in the system, paying those taxes.

BRIAN CHEUNG: Hey, Sara, it's Brian Cheung here. I'm just wondering what your expectations are for the financial conditions for these airliners and what the impact would be for you and your members. We have seen the airline-- the major airlines file for bankruptcy before, namely, in the early 2000s. What did that do to, you know, your members and to the industry, from your vantage point? And would you expect a repeat of that given the coronavirus-related disruptions?

SARA NELSON: If we don't get this federal relief right now as it was intended and passed by this bipartisan deal and the CARES Act, airlines will file for bankruptcy. And then all the promises of keeping people on the jobs will be gone.

I've been through those bankruptcies. Look, I'm an expert. I've been through 20 airline bankruptcies with a front-row seat over a period of 10 years. And what happens once that goes to the bankruptcy court is, all bets are off. Union contracts can be broken. Layoffs move forward. That's all approved. And what's approved at the same time is extra executive compensation for the executives, for the bankruptcy attorneys.

There are some who are licking their chops right now. They're the same people who short their position on Wall Street, hoping that businesses will fail so that they can make money. There are some who are hoping that that will happen, and that is what we're trying to keep from happening here because then it gets out of the hands of the public.

The public has their best control over what these airlines do if they actually get those payroll grants to the companies, and then it has strict conditions on them-- no stock buybacks, cuts on executive compensation, no dividends, and a requirement that they have to keep every single person on the job. So this is the best way to control those corporations.

If you want to get back at those corporations for after 9/11 and what they did and for after 2008 and what they did, this is the best way to do it. These are strict requirements that they have to adhere to, and we want to make sure that this works. And that's why we're so concerned that Secretary Mnuchin is making this difficult for the airlines to take because we will lose control here, and we will lose a major industry that we all count on.

ZACK GUZMAN: Yeah. And I mean, as you were laying out, I mean, it's a very tricky process to make sure after those workers are laid off that they're made whole after the fact rather than keeping them on the payroll right now. But you can add a few more things to that list of why people might not be happy with airline executives and bags fees and everything else we're seeing. And it doesn't make it any easier for the workers to get [INAUDIBLE].

SARA NELSON: And Zack, let me just interject there. All of those things are a product of those bankruptcies. So consumers should be very concerned here, too, because if the airlines go back into bankruptcies, guess what? There's going to be more consolidation, more fees, more squeezing of the consumers.

We don't want to see that happen. And by the way, my workspace is your travel space. So we are your biggest advocates here. And we're telling you that we don't want those seat sizes squeezed because then we have to deal with grumpy passengers, and we don't like that either.

ZACK GUZMAN: Yeah, no, all good points.

SARA NELSON: So listen, we're in your corner here.

ZACK GUZMAN: All right. Sara Nelson, thank you so much for joining us. Appreciate it. Good luck with everything.

SARA NELSON: Thank you.

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