Delta CEO Argues Airline Didn’t Receive Bailout

The CEO of Delta Air Lines made some interesting claims about the billions of dollars in taxpayer support the airline received during the Pandemic.

Bastian claims taxpayer support wasn’t a bailout

The CEO of Delta was interviewed this morning. Bastian was asked if the airline owed taxpayers anything by Joe Kernen, who asked what he described as a "theoretical question."

What was Bastian's response?

“While it had been, two years ago, classified as a bailout, candidly it wasn’t a bailout. The money that was provided to the airlines were there to hold employees in place for the period of time it took for the vaccines to show up and people to start traveling again.

The airlines actually did not receive any significant amount of windfall back through the taxpayers, though we greatly appreciate the support. Because had we not received that support, we would have been forced to lay off tens and tens of thousands of people, and we’d be in a position today not having the air service that this country needs.”

Delta didn’t “hold employees in place”

Delta seems to have a very narrow view of what constitutes a rescue. The claim that this wasn't a rescue because it was intended to help the public is being made by Bastian. The government support was designed to hold employees in place for as long as it took for demand to recover, so that the US would still have widespread air service.

For an extended period of time, airline payroll support was intended to cover payroll costs for the major airlines. The airlines had to agree not to fire employees. Was the money used to keep employees in place? Delta's change in employee numbers suggests not.

• In February 2020 (right before the pandemic impacted demand in the United States), Delta had 91,416 employees
• In February 2021 (after the pandemic impacted demand in the United States), Delta had 62,588 employees

Why did Delta's workforce decrease during the Pandemic? The money was used to offer early retirement packages to employees.

• A condition of accepting government support was that the airline wouldn’t involuntarily lay off people, but the airline could pay people to voluntarily leave the company
• It was in Delta’s best financial interest to get early retirements from senior pilots and flight attendants, since they’re also the highest paid, and they can be replaced by more junior (and lower paid) employees
• Delta had multiple operational meltdowns during the pandemic due to staff shortages (as did most US airlines), precisely because they spent taxpayer funds on encouraging employees to retire early, rather than “holding” them in place

I have to disagree with Bastian's logic. He claims that the money the airline received was used to keep employees. The airline spent a lot of money getting employees to retire early, which leads to lower cost employees in the long run.

Bottom line

Delta received billions of dollars in government support, but the airline wants you to know that it wasn't a bail out.

The airline spent a lot of money to get employees to retire early, so that doesn't paint the full picture. Delta had several operational issues due to staff shortages as demand started to recover.

What do you think about the claim about taxpayer support?