Please ensure Javascript is enabled for purposes of website accessibility

Alaska Air Pilots Reach Deal With Airline to Avoid Furloughs

By Lou Whiteman – Jul 21, 2020 at 1:51PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The union is hoping a combination of early retirements and pilots on leave will be enough to prevent involuntary separations.

The union representing pilots at Alaska Air Group (ALK -2.29%) said Tuesday they have reached a deal with the airline to avoid pilot furloughs.

Alaska and other airlines are making plans to contract this fall due to a lack of travel demand. The COVID-19 pandemic has hit airlines hard, but the industry is prohibited from doing involuntary layoffs through September 30 as a condition for receiving government assistance.

As of October 1 all bets are off, and with demand under pressure again as new COVID cases spike higher, airlines are expected to shrink by 30% or more before year's end.

An Alaska Air plane in flight.

Image source: Alaska Air Group.

The Alaska arm of the Air Line Pilots Association (ALPA) in a statement released Tuesday said it has reached agreements with the airline on a number of incentivized leave and early retirement programs designed to address the company's need to downsize without layoffs. The union said strong pilot participation in those programs has "effectively avoided" the threat of furloughs by the airline.

"We've always maintained that there was a smarter way to address our company's staffing issues than furloughing pilots," Will McQuillen, chairman of ALPA's Alaska master executive council, said in a statement. "Ultimately, our senior management agreed with our point of view and worked with us on implementing these programs."

The airlines and their pilots are looking for ways to get creative as they deal with the ramifications of COVID-19. Due to the global nature of the pandemic, avenues typically available to furloughed pilots, like going overseas for work, are not options. Airlines, meanwhile, are eager to preserve a period of relative peace with labor and retain flexibility to expand if demand returns faster than forecast.

Southwest Airlines on Monday said more than 25% of its workers had agreed to take buyouts or temporary leave, boosting that company's effort to avoid layoffs. And Delta Air Lines last week proposed cutting pilot-guaranteed minimum pay in an effort to avoid furloughs.

Lou Whiteman owns shares of Delta Air Lines. The Motley Fool recommends Alaska Air Group, Delta Air Lines, and Southwest Airlines. The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.