Unions are pushing Atlanta-based Delta Air Lines and other carriers to hold off on stock buybacks that would reward shareholders, saying carriers should first restore staffing to avoid operational meltdowns and complete labor contract talks.
Airlines that accepted federal coronavirus relief funding from the CARES Act were temporarily banned under that law from buying back stock to boost their share prices. But the restriction is set to end Sept. 30.
Now, a coalition of unions representing flight attendants, pilots and other workers is pushing airlines to pledge to halt stock buybacks beyond that period if they have not stabilized their operations.
On some of the busiest travel weekends this summer, Delta and other airlines canceled hundreds of flights a day, leaving travelers frustrated with disruptions to important trips and long-awaited vacations. Lost baggage, delays and missed connections have also contributed to travel nightmares.
Airlines have struggled to staff enough pilots and other workers to meet the rebound in demand as travelers return to the skies. Delta this summer cut its flight schedule to make it more manageable in an effort to avoid last-minute cancellations. Some lawmakers have urged the U.S. Department of Transportation to crack down on airlines that have not been able to deliver.
“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 the CWA union’s Passenger Service Airline Council, in a written statement.
Delta received roughly $12 billion in taxpayer assistance to survive the pandemic, including some federal loans. The CARES Act and American Rescue Plan restricted stock buy backs to ensure taxpayer money went to supporting workers.
Companies purchase their own stock to limit the number of shares on the open market to boost the price. But such repurchases are sometimes criticized for increasing the wealth of shareholders and stockholding-executives at the expense of investment in the business or its workers.
Last month, an analyst asked Delta CEO Ed Bastian if the airline has considered buying back stock when the restrictions come off. Delta shares were trading at about $29.70 at the time, down from more than $50 before the COVID-19 pandemic. Delta stock was trading in the $33 range Friday afternoon.
“We can’t do anything at the moment with respect to CARES Act limitations,” Bastian said during the conference call. “But we talk over the long term that we’ve got a responsibility to all constituencies, to our customers, to our employees, and importantly to our owners as well as our communities.”
Bastian said owners, or shareholders, “shouldn’t be forgotten about, and we didn’t forget about them during the pandemic.”
The Air Line Pilots Association (ALPA), which represents pilots at Delta and other major carriers, is among the unions participating in the campaign against stock buybacks. ALPA president Joe DePete said in a written statement that airlines should “get their operations back on track by investing in their workers before rewarding Wall Street.”
Pilot staffing issues have driven flight cancellations on Delta and other airlines on some of the worst days for airline operations this summer. ALPA is in contract negotiations with Delta on a new contract and has picketed at Hartsfield-Jackson and other locations around the country this year to protest fatiguing schedules.
Aside from its pilots, Delta employees are mostly non-union. However, the Association of Flight Attendants, which is playing a prominent role in pushing for the halt in stock buybacks, is seeking to organize Delta flight attendants.
Sara Nelson, president of the Association of Flight Attendants, posted a video on Twitter Thursday asking people to sign a petition to tell airlines to “invest in people, not Wall Street.”
“If you don’t want the airline sending money to Wall Street before they fix the problem with the operations and complete contract negotiations so there can be good jobs to keep people and attract people to this industry, then sign the pledge with us,” Nelson says in the video.
In a statement Thursday, Delta did not say whether it would repurchase stock after the restriction ends Sept. 30. But a spokesman said the company plans to invest $6 billion into its business this year, and gave employees a 4 percent base pay increase.
“Delta’s top financial priority is restoring its financial foundation by generating sustained and meaningful profitability and cash flow to support debt reduction and reinvestment in the business,” the company said in the statement.
Delta passenger Leslie Wilson dealt with a flight disruption and a lost bag on a trip back from Iceland earlier this month. She said airline staff “just can’t keep up, and it’s happening everywhere.”
She called Delta for reimbursement for a night at a hotel and to recover her bag.
“You can’t get a human to talk to you,” Wilson said.
After arriving home in Sandy Springs, Wilson said she returned to Hartsfield-Jackson to try to get her bag back, which was eventually found in New York and returned to her.
Wilson said she thinks it “makes sense that they should not be able to do (stock buybacks) until they can first serve their customers.”
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