Spirit Airlines Strikes Deal to Avoid Pilot Furloughs
The COVID-19 pandemic has crushed air travel demand this year. Fortunately, the CARES Act has provided critical support to airlines and their employees. The pandemic relief bill's Payroll Support Program has allowed hundreds of thousands of airline workers to keep their jobs by covering a substantial portion of airlines' payroll costs from April to September. In exchange, the airlines agreed not to involuntarily lay off or furlough any employees until at least Oct. 1.
However, Oct. 1 is approaching fast, and air travel demand remains weak. As a result, some airlines are preparing to implement furloughs and layoffs. But not Spirit Airlines (NYSE: SAVE), which recently reached an agreement with its pilots that will eliminate the need for pilot furloughs in the months ahead.
While airlines would like to avoid as many furloughs as possible, it's particularly important in the case of pilots. Furloughed pilots need to undergo an extensive retraining process when they are recalled to work. In addition to offsetting a lot of the short-term labor cost savings, the training requirements mean that an airline that furloughs too aggressively may struggle to restore capacity quickly when demand returns.
Source Fool.com
