Unions push airlines to promise they'll avoid stock buybacks
Labor unions are pushing U.S. airlines not to buy back their own stock.
DALLAS -- Labor unions are pressuring U.S. airlines not to buy back their own stock and instead to spend the money on hiring more workers and fixing problems that caused widespread flight delays and cancellations this summer.
The unions said Thursday that the four largest U.S. airlines spent more than $39 billion on stock buybacks from 2014 through 2019 rather than making investments to help employees and passengers.
The airlines are currently barred from buying back their own shares as a condition of $54 billion in federal pandemic aid, but that prohibition ends after Sept. 30. Union officials worry that buybacks will come back now that most U.S. airlines have returned to profitability after huge losses in 2020 and 2021.
The unions, which represent pilots, flight attendants, mechanics, baggage handlers and other workers, launched a campaign and petition drive that portrays buyouts as a giveaway to Wall Street and a tool for airline executives to boost their own stock-based compensation.
“We paused the greed in aviation for a little while," said Sara Nelson, president of the Association of Flight Attendants.
The unions asked airlines to pledge to forgo buybacks until until “operational meltdowns are not the norm” and they reach new labor contracts — unions are seeking substantial wage increases.
A union representative said Thursday that none of the airlines immediately agreed to the pledge.
The chief financial officer of American Airlines, Derek Kerr, said in a recent interview that buybacks are not on the table.
“There is no plan to do any share repurchases. All of our excess liquidity will go to pay off debt,” Kerr said. A spokesman said Thursday that is still American's position.
United Airlines said that it is not currently seeking buybacks. “Our highest financial priorities right now are restoring our balance sheet and investing in our employees and customers,” a spokeswoman said.
A Southwest Airlines spokesman noted that the airline has not announced any plans for buybacks. Delta Air Lines did not immediately respond for comment.
Stock buybacks are a favorite target of unions and Democratic lawmakers, who often see them as widening inequality between workers and wealthier investors. The climate, health care and tax bill that President Joe Biden signed this week includes a new 1% excise tax on them beginning next year.
Corporations view buybacks as a way to reward shareholders by reducing the number of shares and making the remaining ones more valuable. Investors often prefer them over dividends, which are treated as ordinary income and taxed at up to 37%. If buybacks boost a stock's value, investors who hold the shares long enough pay a lower capital-gains tax on the profit when they sell — no more than 20%.