Airlines took $54 billion in direct taxpayer cash during the pandemic. They also received $25 billion in subsidized government loans, tax relief, and subsidies for their partners like airports and contractors. This was all needed, they said, so that ‘airlines were ready to fly when travelers returned.’
The main requirement was that airlines had to keep everyone on payroll, so they’d remain connected to the airline. However airlines acted in bad faith.
- They used the cash to pay employees to retire early
- They pushed more employees out the door
- And they paid employees to stay home (meeting their legal requirement) instead of staying trained, certified, and ready to fly.
Delta even declared it wouldn’t have to fire anybody before the second bailout, but took the second and third payroll support payments anyway and they still didn’t honor the pledge. They shed over 30% of their workforce (‘voluntarily’).
The airline declared they effectively did not need a bailout, since they didn’t need furloughs or layoffs, in order to survive – and even in order to avoid reorganization in which shareholders and creditors might have taken a haircut. Yet they took an addiitonal $4 billion in taxpayer money anyway – and didn’t keep their end of the bargain, even though they acted legally. If they had, they would have enough staff now to operate more flights and make more money, meeting customer demand.
Now Delta CEO Ed Bastian is making excuses for his airline’s poor operational performance that results from lack of staff, and loss of experience among middle management that runs the airline. His explanation? Delta tried too hard to deliver for customers.
Delta CEO Ed Bastian said Wednesday that the company’s recent mixed earnings report came about because the airline industry “stretched itself” to capture as much demand as possible coming out of the pandemic, creating a “fair bit of operational stress.”
“We pushed too hard,” the head of Delta Air Lines (NYSE:DAL) told CNBC.
With travel overall still below 2019 levels, if they’d honored their commitments to keep everyone attached to the airline they probably wouldn’t have had nearly the same challenges. Some small percentage of delays and cancellations are attributable to air traffic control staffing, and getting through the airport is a challenge because of the combination of reduced airline airport staffing and reduced TSA staffing (plus airport concessions may not be fully staffed, either).
But the biggest reason for challenges? Delta just cares about its customers so darned much and wanted to fly them when they were interested in travel again so the airline ‘stretched’ and pushed themselves too darned hard. Now they need to give themselves a break, not hold themselves to the same standard of flying so many trips, in order to sort things out.
Bastian is just like the job candidate who answers the question, “what’s your greatest weakness?” with “I work too hard, and don’t focus enough on outside interests.”
In truth Delta has tarnished its reputation for being better than competitors, on which its revenue premium relied, and its brand that drove credit card revenue despite a less lucrative loyalty program than competitor products.