Hawaiian Airlines, the state’s largest carrier, gave a 60-day notice to its labor unions today that it might have to furlough more than 2,000 union workers in departments across the company.
Peter Ingram, president and CEO of Hawaiian Airlines, told the Star-Advertiser that the company issued the Worker Adjustment and Retraining Notification Act notices as required by law, but ultimately hopes involuntary separations will be reduced through voluntary reductions and early retirements. Another round of the federal payroll support program or returning travel demand also could make a difference, Ingram said.
“I underscore that this is a very difficult day for everyone at our company in what has been a very difficult few months. And, what makes it really so hard is that none of this is the fault of any of our employees who continue to do a terrific job everyday,” Ingram said. “I just feel terrible that we’ve come to this point. But it is really important that we take some steps to preserve the company for the long-term as we try to weather this coronavirus storm.”
In addition to the union furloughs, Hawaiian is planning permanent cuts to its administrative or non-union force. Ingram said Hawaiian already had offered voluntary layoff packages to its administrative employees, which 8% had accepted before a window on the offer closed Tuesday. Ingram said the company is still working through the process, but expects Hawaiian will need to involuntarily layoff additional administrative workers.
Roughly 6,200 of Hawaiian’s workers are unionized, another 1,300 or so are considered administrative or non-union employees. While the reductions in Hawaiian’s administrative workforce will be permanent, Ingram said union workers will have recall rights if the carrier’s business were to grow back.
Ingram said recovery is hard to predict given the uncertainty about the disease and the industry environment.
“Certainly, we’ll be looking for opportunities to build back the business as we can over time,” he said.“We’ve still got our fleet that is capable of being 100% of the size we had planned to be this year and so if there are opportunities for us to go and productively use those aircraft we’d be happy to call people back.”
These latest cuts at Hawaiian come even though earlier in the year more than half of the carrier’s workforce took some form of voluntary furloughs, ranging from a few days to a few months.
The carrier also participated in the federal payroll support program, which helped protect jobs through the end of September. There’s been a proposal brought forward by the major national unions, including the unions representing Hawaiian’s union employees, to extend the program from October to March.
“If Congress were to pass such a law and the President were to sign it into law, the likelihood we expect is that the size of the reductions that the industry would need to make, including Hawaiian, would be a lot smaller at the end of March than it would be at the end of September,” Ingram said.
Hawaiian, like all other airlines, has struggled to respond to a shocking COVID-19 drop in travel demand, which fell off a cliff in March and April, improved some in May and June, only to begin declining again in July as coronavirus cases spread.
“Today we are operating about 15% of our prior schedule, today we are about 85% smaller than we were in 2019,” Ingram said.”Our primary planning scenario focuses on being a smaller airline by about 15% to 25% next summer compared to 2019 levels.”
On Tuesday, Hawaiian reported that its adjusted net income, including CARES Act deductions and other changes, was a loss of $174.7 million, or $3.81 a share. Revenue fell to just over $60 million, a nearly 92% drop from the $712 million-plus that it realized in the second quarter of 2019.
Hawaiian reported a second-quarter daily cash burn of about $3.3 million.
Hawaiian is one of the state’s largest employers and prior to COVID-19 was enjoying a long growth period. From 2005 to March, it had gone from about 3,500 to 7,500 employees, about 90% of whom were working in Hawaii.