Flight attendants at United Airlines have slammed the Chicago-based carrier’s decision to pursue as much as $1.5 billion in stock buybacks, saying that the latest share repurchase scheme is a “sickness that hurts workers and consumers alike.”
Airlines had been barred from taking part in stock buybacks as a condition of the federal government providing financial assistance to the industry during the COVID pandemic, but that condition has now come to an end.
On Tuesday, United said that it planned to buy back the shares that were originally issued to the US Treasury under the pandemic-era CARES Act and Payroll Support Program, representing around 7% of the airline’s current market capitalization.
This is the first time that United has pursued a share buyback scheme since early 2020. So far, United has repurchased approximately 2 million shares out of roughly 6.4 million warrants that were issued to the U.S. Treasury in exchange for the COVID financial support.
“United Airlines management just made a huge mistake,” blasted Sara Nelson, the international president of the Association of Flight Attendants (AFA-CWA) and Ken Diaz, the union’s local leader for the United Airlines chapter, in a joint statement.
“Stock buybacks are a sickness that hurts workers and consumers alike,” the statement continued. “The airline industry was rid of them, but a greedhead hedge fund broke the seal in its efforts to gain control of Southwest Airlines and now United Airlines management is following their lead to manipulate the stock and cheat workers and passengers.”
Stock buybacks are commonly used when a company believes that the share price is undervalued. By reducing the number of shares in circulation, the price of the remaining shares often increases in value, which brings obvious benefits to shareholders.
From the perspective of the flight attendant union, however, stock buybacks reduces the amount of money that United has to invest in its product and employees, especially with contract negotiations entering an incredibly difficult phase.
“United Airlines Flight Attendants voted 99.99% to authorize a strike vote as management has delayed negotiations at every turn. It’s well past time for Scott Kirby to send decision makers to the table and stop the delay tactics,” the joint statement from Nelson and Diaz explained.
“That money United just promised Wall Street belongs to Flight Attendants who worked throughout the pandemic and during this taxing recovery for all of us on the frontlines.”
On Thursday, United flight attendants are to stage a ‘historic’ day of action outside the carrier’s headquarters in Chicago as they grow weary over the prolonged contract negotiations.
The union demanded an immediate pay raise of 28% plus 4% pay raises every year thereafter as part of an open-ended contract that would put crew members’ earnings at the Chicago-based carrier at the very top of all US airlines.
United Airlines has rejected AFA’s economic proposal and has instead offered to match a pay deal that was recently ratified by flight attendants at American Airlines.
United’s flight attendants are also fighting for the concept of ‘ground duty pay’, which would see crew members paid their hourly flight pay for all the time they spend on the ground.
That proposal has been rejected by the carrier, and so too has a demand for retroactive pay to cover the years that flight attendants have gone without a pay raise.
Contract negotiations are set to resume early next week.
