Article Author:
Associated Press
David Koenig
Dallas (AP) — Unions won't buy back shares in US airlines, instead offering more workers. Pressure to spend money on hiring and repairing. The problem caused widespread flight delays and cancellations this summer.
Labor unions said Thursday that the four largest U.S. airlines will spend more than $39 billion in share buybacks from 2014 to 2019 rather than making investments to help their employees and passengers. said to have spent
Airlines are now barred from buying back their own shares as a condition of $54 billion in federal pandemic aid, but that ban ends after his Sept. 30.
Unions representing pilots, flight attendants, mechanics, baggage handlers and other workers launch campaigns and petitions to buyouts to Wall Street as giveaways and buyouts as a tool for airline executives to boost their own stock-based compensation.
"We have paused greed in the aviation world for a while," said Sarah Nelson, president of the Association of Flight Attendants.
Unions called on airlines to pledge not to buy back until new labor contracts are reached, as "operational meltdowns are no longer the norm." The union is demanding a significant wage increase.
Union representatives said Thursday that none of the airlines immediately agreed to the pledge.
American Airlines chief financial officer Derek Carr said in a recent interview that said it was not considering a share buyback.
"We have no plans to buy back shares. All excess liquidity will be used to pay down debt," Kerr said. A spokesman said Thursday that it remained the US position.
United Airlines said it is not currently seeking repurchases. A spokesperson said, "Our top financial priority right now is to restore our balance sheet and invest in our employees and customers.
A Southwest Airlines spokeswoman said the airline will be repurchased. Delta Air Lines was not available for comment.
Share buybacks are a favorite target of unions and Democratic lawmakers, with workers and wealthy investors Often seen as increasing inequality between homes, the climate, health care and tax bill President Joe Biden signed into law this week includes a new 1% excise tax starting next year.
Companies see share buybacks as a way to reward shareholders by reducing their share count and increasing the value of the remaining shares. preferred to dividends, which are treated and taxed at up to 37%.If the buyback boosts the value of the stock, investors who hold the stock long enough will pay capital gains tax on their profits when they sell it.
"There is no inherent problem with buybacks," said Charles Elson, founder of the Center for Corporate Governance at the University of Delaware.
But Elson said there are pitfalls: companies may waste money by paying too much for stock, and management with stock options may not be willing to buy back their own shares. It would benefit, but not from a dividend, which he said could be resolved by giving management restricted stock units instead of options.
56}Charles Tharp, a business professor at Boston University who advises corporate boards on compensation, said raising employee salaries and buying back stock were two different decisions.
If a company approves a share buyback, "it looks like I'm choosing to serve shareholders rather than employees," he said. , probably not.
If a company deems a wage increase necessary to remain competitive, it will make that decision whether or not to buy back its own shares, Tharp said.
In 2020, unions provided major support for taxpayer funding of airlines. Airlines warned early in the pandemic that they were facing disaster from a plunge in travel. Union officials and Democratic lawmakers argued that the support should be tied to a ban on stock buybacks and limits on executive pay.
During the pandemic, airlines were prohibited from laying off employees but were allowed to pay incentives, leaving tens of thousands of employees to leave. When air travel picked up in the summer, airlines were understaffed, with about 45,000 flights canceled and 472,000 delayed since June 1.
