Elected officials and consumer groups have pushed for bans on stock buybacks and dividends in exchange for help.
By Kyle Arnold
Dallas Morning News
March 20, 2020
American Airlines CEO Doug Parker and union leaders are asking government leaders for aid “with appropriate conditions” amid calls for bans on stock buybacks and dividends for companies receiving a federal bailout.
“The investment being sought by our airline is necessary to ensure its continued viability and to, most importantly, lessen the impact of this pandemic on our employees and passengers,” said the letter signed by Parker and the airline’s union leaders. “However, governmental assistance, with appropriate conditions, is an essential component of our path to sustainability and recovery.”
The letter was sent Thursday to Treasury Secretary Steve Mnuchin and majority and minority leaders in the U.S. Senate and House.
Lawmakers, business leaders, unions and consumer groups have demanded a ban on share repurchases and dividends at any company that agrees to receive government aid. President Donald Trump said Friday he would “demand” that those companies refrain from buybacks.
American Airlines has spent about $12 billion in stock buybacks since 2014.
Joining Parker on the letter were representatives of the Allied Pilots Association, the Association of Professional Flight Attendants, the International Association of Machinists and the Transport Workers Union.
“We want to ensure the talked-of ‘conditions’ of a government investment go to employees and not to share buybacks and executive bonuses during the loan and/or assistance period,” said Dennis Tajer, a spokesman for the Allied Pilots Association.
The letter shows the growing desperation by leaders at American Airlines to get help to carry them through the sudden downturn in the industry caused by the COVID-19 coronavirus outbreak. On Thursday, American said it was cutting its April traffic by 30% and was considering even more cuts in May.
“This pandemic and its impact are unprecedented,” the letter said. “And while the U.S. government is taking urgent action to protect public health, our industry is seeing an extraordinary erosion in demand for air travel.”
American has also frozen hiring, grounded airplanes and even canceled a class for flight attendants in training.
“Any sustained damage to our industry and the supply chain is contrary to our national interests,” the letter from Parker and union leaders said.
Local government leaders, including Texas Gov. Greg Abbott, Dallas Mayor Eric Johnson and Fort Worth Mayor Betsy Price, also penned a letter to federal government leaders asking them to give financial assistance to airlines.
Dallas Mavericks owner and tech billionaire and Mark Cuban has been among those calling for a ban on share buybacks for companies that get government aid, along with New York Congresswoman Alexandria Ocasio-Cortez.
Consumer groups are pushing for more than just financial restrictions. Travel Fairness Now sent a letter to airlines and congressional leaders this week demanding that airlines provide cash refunds for canceled flights and more thoroughly clean planes.
“The last investment taxpayers made in the airline industry during a time of crisis was followed by record profits on the backs of consumers through less competition, transparency, passenger comfort and a proliferation of fees for services previously included in the price of a ticket,” said a statement from Kurt Ebenhoch, executive director of Travel Fairness Now. “This time, massive public assistance to the airline industry must be coupled with a meaningful commitment from the airline industry to passenger safety and consumer protection.”