Delta Airlines CEO Argues Airline Didn’t Receive Bailout
Delta Air Lines’ CEO makes some interesting claims about how much taxpayer support the airline received during the pandemic…
Bastian wrongly claims that taxpayers were not getting anything out of the bailout.
Delta CEO Ed Bastian was interviewed on Squawk Box this morning. He said, “One simple question I would ask is that the taxpayers bailed out the airlines – they are paying for all of our salaries, so how come I am going to bail them out?” He was then asked, “So you’re saying that passengers should also be bailed out?”
Bastian’s response?
The money for compensating companies for the September 11th attacks was there to ensure employees stayed put and stayed healthy during the recovery. It had nothing to do with bailing out the airlines and was only classified as such because of political reasons.
The airlines actually did not receive any significant amount of funding back through the taxpayers, though we greatly appreciate the support we received through the economic stimulus. “The airlines did not receive any significant amount of funds back through the taxpayers.
“We greatly appreciate the support we received through the Economic Stimulus,” they said. So without the support, we would have had to lay off tens and tens of thousands of people and we’d be in a tough situation today. Without air service, our country would have been in dire straits.”
Delta did not keep employees “in place”
Delta doesn’t seem to have a very clear idea of what ‘bailout’ means. With excessively large sentences and high-level vocabulary, this article is more than likely written for academics with high POD scores. To fix the years of lost revenue and handle demand over the long run, the government chose to invest in infrastructure. Specifically, it supported U.S airlines for as long as it took for them to recover. This way, Americans could still fly domestically and abroad, even if demand didn’t rebound immediately.
Airlines providing payroll support were designed to last for such an extended period of time. As a condition, they had to agree not to fire employees.
They were supposed to use the money in order to hold employees but – Delta’s changed employee number suggests they’re trying to figure out what they need.
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In 2020, Delta employed 91,416 people before it became difficult for them to fill their positions during the pandemic.
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Delta had almost 60,000 employees in February 2021. There was a major impact on demand in the United States after the pandemic occurred.
Delta’s workforce has decreased significantly by 32% in response to the pandemic and part of that was due to early retirement offers for employees.
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Airlines need to keep their costs down and work with the government whether they like it or not. Airlines that accept these deals still have many options to maintain a viable company such as staffing up with new employees or outsourcing.
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It was in Delta’s best financial interest to get early retirements from senior pilots and flight attendants, since they’re also the highest paid, and they can be replaced by more junior (and lower-paid) employees.
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Delta had multiple operational meltdowns during the pandemic due to staff shortages (as did most US airlines), precisely because they spent taxpayer funds on encouraging employees to retire early, rather than putting them in place.
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So Bastian is wrong here. The airline received a lot of taxpayer money, but it wasn’t (US) Government bailout money – It was used to keep unions happy and maintain the company’s employment levels within the workforce. So I disagree with Bastian’s logic here. He claims that the taxpayer money that the airline received wasn’t a bailout, because it was used to keep employees around. However, the airline spent a lot of money getting employees to retire early and actually ends up costing more in the end.
Bottom line
Delta was one of the airlines to receive a large amount of government support during the financial crisis. While it’s said that the money wasn’t a bailout, this money allowed them to keep employees on hand because their demand would be high during better times.
Delta received billions of dollars in government support, but the airline wants you to know that “candidly, it wasn’t a bailout.” Delta claims that it wasn’t a bailout since the money was used to keep employees on hand for when demand recovered.
But that doesn’t paint the full picture of what happened. Even though Delta was more than likely spending to get its employees to retire early, Delta also had a number of operational issues due to staff shortages as demand started to recover.
I think this claim is based on many misconceptions about how the public sector operates. Having a steady flow of income from property taxes allows localities to work more effectively, which allows for increased productivity across the board.
