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Flight attendant union president on the need for additional stimulus

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Sara Nelson, Association of Flight Attendants President, joined Yahoo Finance Live to discuss the toll the pandemic has had on the airline indsutry and why additional stimulus is needed as soon as possible.

Video Transcript

[MUSIC PLAYING]

ADAM SHAPIRO: minutes to the closing bell, and a bit of a, don't want to use the word recovery, but we're pushing a little bit higher. The Dow is still off, but now off about 150 points. An hour ago, it was off 200 points. NASDAQ is positive by more than 50 points, and the S&P 500 is negative by 8 points. Want to check out the airlines, too, because there's been some positive news for some of the airlines. For instance, American Airlines is up almost 5% today. Delta is off slightly. United's off a bit, and Southwest is up almost a full percent.

That's a good segue for us to invite into the program our next guest, Sara Nelson, the Association of Flight Attendants President, who understands that although the airlines have gotten this far, there is much further to go. And thousands of Flight Attendants, their jobs are still on the line. It's good to see you again, Sara.

SARA NELSON: Good to see you, too.

ADAM SHAPIRO: Are you hearing anything from Congress? Will the Payroll Support Program extension be a part of this potential new stimulus that appears to be on its way out of Congress this week?

SARA NELSON: So I think we should be really clear first of all that there is no stimulus. The efforts to put in place a stimulus bill failed, and this is an attempt now for emergency relief. So the $908 billion package, bipartisan package, that's been put together and is being talked about, we're expecting to see language very soon on that. Does have some real momentum here, and it looks like they're going to get this done. And the Payroll Support Program for the airlines is a part of this four-month emergency relief deal.

SEANA SMITH: Sara, how important is this just-- because we've talked about the airline's role in vaccine distribution and how important of a role they are going to play over the next several months. In getting this money from the government and getting this approved, how critical is that for vaccine distribution?

SARA NELSON: Well, vaccine distribution cannot be done at the rate that it needs to be done without the passenger aircraft fully up and operating. So some of these vaccines need to be transmitted only on jumbo jets. Those are planes that are on the ground right now.

Even if pilots are remaining on the payroll, there's not enough flying for them to get there three takeoffs and landings in order to keep their certification up, which means that they will fall out-- their credentials will fall off, and they'll have to go back through training.

The training centers are reduced in the amount of people that they can actually hold in these training centers because they're using COVID protocols to be able to do that. The airlines have already stretched the waivers on any training and certification to the farthest extent. They got those training waivers in March and April and May when those training centers were shut down altogether.

So we are stretched to the absolute limit here, and if we don't get this payroll support in place in December, we won't be able to get the people, planes, and routes back in place in order to be able to meet the demand for vaccine distribution. And vaccine distribution is critical for us to get out of the stress of this pandemic and open our economy back up and recover.

Right now, I just want to note, even with demand back at about 40%, there's only about 20% of the revenue at that. So we're talking about 20%, 25% of revenue of last year because business travel is nonexistent because business travel is following CDC guidelines, and there is not business travel. Businesses are not sending people out--

ADAM SHAPIRO: Sara?

SARA NELSON: --onto planes to travel. Yes?

ADAM SHAPIRO: So we had Doug Parker on from American Airlines, and I realize that their flight attendants are organized under a different organization, a labor unit, but it's the same for all the airlines. They don't expect to be revenue neutral, cash burn neutral rather, until the spring of next year, maybe even later. How many jobs among-- I think it's 50,000 that you represent, the flight attendants-- are at risk if we don't get this extension of the Payroll Support Program?

SARA NELSON: So there's about half of my union right now that's going without a paycheck, others that are going without health care. So not everyone is on furlough, but they're on an unpaid status in many cases. And at American Airlines, that's 19,000 people who are on an involuntary furlough, no paycheck, no health care, and others who are on that no-paid status to make things work.

So we're talking about over 100,000 people going without that paycheck, going without health care unless we get this in place. And getting this in place and having this four-month bridge will get us to a place, as Doug Parker was talking about, where we can actually sustain these jobs and maintain these aircraft without having to have furloughs.

So it is a critical component now to get this infrastructure in place to be able to meet the demand for vaccine distribution and everything else we need to do to fight the virus. But it's also important to create this bridge so we can get to a place where people are not put out of work.

SEANA SMITH: Sara, when you take a look at how the airlines stand right now, clearly they are hurting and hurting very badly from the pandemic. But they do have a decent amount of liquidity, meaning that they're going to likely survive. We likely won't see any of these big airlines file for bankruptcy.

But I'm curious, and I know it's a little bit early to be talking about this, but as we take a longer term view of this, 6 months, 12 months, 18 months down the road, what is the size of the airlines likely going to be? Are we going to see airlines that are significantly smaller than what they were before the pandemic?

SARA NELSON: Look, they're already smaller, and they're going to emerge smaller. And if you take the Great Recession, for example, the airlines did not actually have furloughs during that time. They weathered the storm. They shrunk about 15% in the jobs. They were able to manage that through leaves, and they were able to weather the storm.

So if we emerge at between 70% and 85% of what we were before with the people who have taken separations and the contractual provisions that allow for people to have some flexibility in their schedule, the airlines can manage that and continue to provide pretty good demand for the traveling public and for those needs. So it may be a little bit smaller for a little while, but we're going to climb back to the size that we were before this pandemic started within a few years.

ADAM SHAPIRO: Very quickly, why go back to where we were in 2019? The whole model has changed. Business travel, for instance, there's a projection that anywhere from 35% to 40% of business travel will not come back

SARA NELSON: Yeah, I know that people say that, but our experience in aviation has been that when technology has improved and people have been more connected around the world through technology that travel actually increases because there's a greater demand for humans to be together. People want to be together, and you're hearing that right now everywhere from schoolchildren to families who have not been able to get together.

The first time some business makes the deal because they went there in person, we're going to see a return for all business travel. So I understand that there are some look at that right now and some businesses who are thinking about how they can cut back on that those travel expenses, but it'll bounce back as soon as we get back to traveling.

ADAM SHAPIRO: I will, quote you, "people want to be together." Sara, thank you very much for joining us.

SARA NELSON: Thank you.