Hawaiian Airlines job cuts loom despite $ 420 million loan

Hawaiian Airlines got a $ 420 million lifeline from the Treasury Department on Tuesday, but the CARES Act loan alone will not prevent the more than 2,500 job cuts planned in the most major state airline.

The Treasury Department announced on Tuesday that United Airlines, American Airlines, Alaska Airlines, Frontier Airlines, JetBlue Airways Corp. and SkyWest Airlines had also accepted loans from the Treasury Department, which were authorized by the CARES Act to provide liquidity to qualifying businesses that suffered losses from the coronavirus pandemic.

Hawaiian spokesman Alex Da Silva said the carrier appreciates the “work of the Treasury in finalizing our CARES Act loan, which allows us to borrow up to $ 420 million and is a valuable source of cash for a long time. period when we had about $ 3 million per person. day of money consumption.

Da Silva said the latest Treasury loan is separate from the CARES Act Payroll Support Program, “which has been a lifeline in supporting our frontline employees who continue to provide essential air transportation to the communities served. by Hawaii and the wider US economy during the pandemic. “

“Unfortunately, given the prolonged and profound impact of this unprecedented crisis, more than 2,500 of our employees will be out of work as of October 1, unless the PSP is extended,” he said. “We continue to advocate for a clean six-month PSP extension to give passenger demand the opportunity to recover from historic lows and ensure our employees remain ready to scale up our operations to support a economic recovery.”

The Associated Press reported that the US Congress has been considering a second round of air aid for weeks, but it is suspended in debate over a larger national relief package. Trade group Airlines for America told The Associated Press that a House proposal unveiled on Monday raises some hope as Democrats and Republicans appear to be talking.

But in the absence of a deal, carriers like Hawaiian exploit Treasury loans, which are seen as a last resort because they come with government restrictions.

According to a press release issued Tuesday by the Treasury Department, borrowers must adhere to the requirements of the CARES Act, such as “maintaining employment levels and limiting employee compensation, dividends and buyouts.” actions ”.

Borrowers must also provide “warrants, equity or senior debt securities as appropriate tax compensation”.

The Treasury Department did not provide details on Tuesday on loan amounts, which are capped at $ 7.5 billion each and can be finalized until today.

It is hoped that the loans will save time for the airline industry, which is currently in crisis and anticipates a slow recovery. The Associated Press reported that America’s four largest airlines – Delta, United, American and Southwest – together lost $ 10 billion in the second quarter alone.

Hawaii’s parent company, Hawaiian Holdings Inc., reported an adjusted second quarter net loss, including deductions under CARES and other changes, of $ 174.7 million, or $ 3.81 per share. Revenue fell to just over $ 60 million, down almost 92% from the $ 712 million and more achieved in the second quarter of 2019.

“The second quarter has been an incredibly difficult time for our company and for the industry as a whole as we continue to face unprecedented demand destruction from the COVID-19 pandemic,” said the President and Chief Executive Officer Hawaii executive Peter Ingram on the carrier’s second quarter earnings conference call. . “In our home state of Hawaii, we implemented a 14-day quarantine for inbound travelers throughout the quarter, which resulted in us managing a fraction of the schedule we originally planned. of the year.”

Hawaiian is preparing for the launch on Oct. 15 of a pre-arrival testing program in Hawaii that will allow travelers who meet government requirements to bypass quarantine. On Friday, the carrier said it plans to partner with Worksite Labs to set up exclusive labs near Los Angeles and San Francisco international airports, with additional sites in other gateway cities on the continent slated for. the coming months.

The carrier will continue to cap cabin capacity at 70% until November to allow onboard distancing. It has also invested in a “Keeping You Safe” program, which offers frequent disinfection of halls, kiosks and counters; electrostatic spraying of aircraft cabin; Plexiglas barriers at staffed airport counters; and distribution of disinfectant wipes to all guests.

Despite Hawaii’s proactive stance, further issues are expected to arise on Thursday after the PSP ends. The industry has said that unless Congress extends the program, up to 50,000 jobs are at risk. Participating carriers, including Hawaiian, have pledged not to take time off or lay off employees until today.

As of Thursday, Hawaiian is expected to have cut its pre-pandemic payroll by a third, or 2,501 jobs.

Hawaiian predicted that its workforce on Thursday will be 4,946, compared to 7,447 employees.

The planned reduction for Hawaiian includes 1,850 unionized workers who volunteered to leave the company and 466 involuntary union cuts. These include flight attendants, pilots, machinists, reservation agents, dispatchers and other office workers.

This is in addition to the 185 non-union administrative positions that Hawaiian had already cut, mainly by not filling vacancies and by voluntarily leaving.

Farewells have been pouring in for months from some longtime Hawaii employees.

Lola Hiatt, who worked as a flight attendant for Hawaiian for 53 years, opened up about her bittersweet departure on the company’s video blog.

“In January, I ended up taking my last flight. I didn’t know at the time that this would be my last flight. But COVID-19, once things got down to the tubes, I said, “Well, you know, it’s finally my time,” Hiatt said. “It’s a bittersweet way to leave because now I can’t go back and say to my friends, to the staff in the living room, you know junior kids, ‘Hey, that was fun flying. with you guys – I won’t see anyone after this. ‘”

Hiatt alternated between smiles and tears as she recalled better times in the Hawaiian and expressed confidence in the wearer’s future.

“It was a way to enjoy the world, but actually working on the plane, working with people, you have to be a human person – really that was the fun part too,” she said. “Hawaiian Air has been a fabulous company to work for and I believe in Hawaiian Air.”

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