Dear Newbie,
I’m sure this has been a really challenging month for you. After all, since you were hired in the last decade, you’ve never seen anything like this before. Take a deep breath and get ready. It’s going to be a rough ride. I don’t know how long this will last, but eventually, we’ll all come out on the other side.
You are certainly not alone. Back in 2009, we were coming out of the Great Recession. At the end of the year, there were 563,689 people working for airlines in the US. By the end of 2019, that number had soared to 749,965. When you count retirements and turnover, it’s easy to imagine even more employees who have seen nothing but unprecedented expansion since they started.
The most you’ve had to complain about is merging seniority lists, switching payroll systems, and itchy uniforms. Sure there have been pockets of trouble, but there hasn’t been anything that has made you wonder whether your airline would continue to exist until now, at least not on this level. That can lull you into a sense of complacency that no previous airline employee has ever experienced since deregulation.
Just look at those wild swings in airline profits. Oh sure, the 1990s eventually had a few good years between the Gulf War and the one-two punch of the dot com bubble bursting and 9/11, but it was nothing like what we’ve seen this last decade.
Though I don’t know how bad this current coronavirus crisis will be or how long it will last, it’s safe to say it’s going to be very, very bad for the airline industry. It already is, of course, and there’s room for it to get worse. That means all of those concerns about improving work rules and getting pay raises will take a back seat to just hoping you still have a job.
What can you do about it? Well, not much. That’s what’s most frustrating. You are ultimately at the whim of the fickle demand curve. If enough people will pay enough money to buy plane tickets, then all is well. If they won’t, well, trouble is brewing. And right now, nobody is buying plane tickets. This is on a scale none of us have seen before. A great management team can help to limit some of the carnage, but even the best management team can’t get an airline through this madness unscathed. You need to prepare yourself for that reality.
Sit down with those coworkers who have seen this rodeo before. Instead of just rolling your eyes at their stories from the old days as you’ve likely done countless times, listen to them and understand what it was like the last time airlines went through something like this.
That’s not to say this crisis will be just like the others. Airlines today are in much better financial shape than they were at the turn of the millennium or during the Great Recession. It’s not even close. That being said, this drop in demand is far worse than anything we’ve ever seen so those strong balance sheets will be tested immediately. Case-in-point, even with a 50 percent cut in capacity, United says it expects load factors in the 20 to 30 percent range. The net effect will be as bad or worse than 9/11.
I think back to 2001 when I was working at America West. We weren’t in good shape before 9/11, but it got much worse very quickly. The first couple of days were a blur. We were so busy just trying to keep our policies up to date as government rules changed by the minute — not to mention just getting airplanes back in the air — that I didn’t have time to think about much else. But I do remember the Thursday afternoon when our first airplane came back to Phoenix on a ferry flight. We all stood at the windows of our headquarters building and watched as it flew by to land. There were a lot of tears shed that day, and I think much of that was due to the reality that we didn’t know what would happen next.
That was an unsettling feeling, but soon enough I found myself getting used to the new routine. Profit-sharing was a long-lost dream. Victory meant not getting laid off and not having my pay cut. This went on for a very long time.
When I went to work for United in 2004, the airline was bankrupt. I knew that coming in, and I was excited at the possibility of being part of a turnaround story. That certainly didn’t pan out. When I left for another job, I was asked what my starting and ending salaries were at my previous job. When they saw the numbers, they assumed I had reversed them, but no. I had forgotten that having a lower salary than I started with was not normal.
The lack of certainty is the worst part, but ultimately everyone who works for an airline signs up for that at some point in their career. In this case, I expect it is going to stick around for awhile. It wouldn’t surprise me if the effects of this virus on the industry last long beyond the end of the threat. We are heading into uncharted territory.
If you can handle the stress of not knowing what’s next, then there is a certain exhilaration coming back into this industry that has been lacking for many years now. There’s something about fighting for your life that makes for a whole lot of excitement. The urgency builds camaraderie, and it creates lasting memories and friendships.
This will also finally put to the test many of the theses that have been put out in the last decade about how the airlines can now withstand a downturn. We should finally be able to prove whether American CEO Doug Parker’s bold claim that the airline will never lose money again is true or not. (I’m most certainly betting against that stance, though there’s no way Doug had this catastrophe in mind when he made that claim.) We’ll also see if the industry can sustain the much higher salaries that have been negotiated with unions over the last few years. (I’m also betting against that stance.)
I generally try to expect the worst and hope for the best. In that sense I guess I’m more like United with its aggressive early response than others. But even I’m having trouble hoping for the best right now.
If this goes on, I imagine we’ll get back into the land of concessionary contracts and service cuts that have always plagued this industry when things get tough. That being said, I do hold on to that glimmer of hope that maybe I’ll be proven wrong. Maybe the industry is different now. There’s nothing wrong with hoping that’s the case, but every day that passes makes it harder to keep that hope alive.
Either way, you’ll have plenty of stories to tell when this is done. Then you’ll understand why the newbies all roll their eyes when you start talking. I’m sure it doesn’t feel that way now, but you’ll be able to laugh once we’re on the other side. All we can do now is hope we get there sooner rather than later.
BRGDS/CRANKY
