The largest U.S. airlines are making money again. Labor unions don’t want them to spend it on stock buybacks.
A condition of the $54 billion in federal aid that airlines received to pay workers during the Covid pandemic prohibited carriers from share buybacks. That ban is in effect through Sept. 30.
But in a campaign and public petition that launched Thursday, some of the largest airline labor unions — representing more than 170,000 pilots, flight attendants, customer service agents and other industry staff — are urging carriers to stabilize operations and invest in workers before spending on buying back their own stock.
“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,” Sara Nelson, international president of the Association of Flight Attendants, which represents some 50,000 cabin crew members, said in a release announcing the anti-buyback campaign Thursday.
The campaign is also supported by the Association of Professional Flight Attendants, Air Line Pilots Associations, International Association of Machinists and Aerospace Workers, the International Brotherhood of Teamsters, the Transport Workers Union of America, and the Communications Workers of America.
“Our highest financial priorities right now are restoring our balance sheet and investing in our employees and customers,” United said in a statement. The carrier is in the middle of a fleet refresh with close to 300 aircraft set for delivery in the coming years.
Southwest declined to comment and American and Delta didn’t immediately respond.
Many of the workers represented by the unions advocating against a resumption of buybacks are in contract negotiations with their carriers. In addition to higher pay, unions are pushing airlines for more predictable schedules after last-minute airline travel chaos roiled plans for customers and staff alike.
Flight delays and cancellation rates rose this year after airlines struggled with staffing shortages that exacerbated routine problems such as bad weather. “Every dollar that goes toward stock buybacks is a dollar that could have been used to reduce disruption by addressing understaffing, high turnover, excess overtime, and low starting wages,” said Richard Honeycutt, chair of CWA’s Passenger Service Airline Council.
Labor unions pushed lawmakers for the aid package early in the pandemic in 2020, after initial opposition in Congress, some of which was rooted in airlines’ share buybacks before the pandemic. “No blank check industry bailouts,” Sen. Richard Blumenthal, D-Conn., said at the time.
Despite a surge in bookings, a jump in costs including fuel and labor have taken a bite out of U.S. carriers’ bottom lines and their stock prices are trailing the broader market.
Those challenges could make it difficult for airlines to resume buybacks or dividends, which are also barred through Sept. 30, under the terms of the aid package.
“Given the economic uncertainty and perhaps even operations that are still not fully back to pre-COVID levels, we do not expect any to initiate dividends or buybacks this year,” said Savanthi Syth, airline analyst at Raymond James.
She estimated that the earliest that airlines would resume would be mid-2023, with Alaska Airlines and Southwest the most likely candidates among U.S. carriers.
The NYSE Arca Airline Index, which mostly tracks carriers in North America, is down about 21% so far this year, around twice as much as the S&P 500.