Skip to main content

Why Jim Cramer Likes Southwest Over Other Airlines

Jim Cramer weighs in on the airlines.

Let's talk about the airlines. 

Delta plans to furlough 1,941 pilots in October, but believes that the layoffs could be avoided or reduced if the company can reach an agreement on cost cuts with the pilots' union.

Delta warned pilots of potential furloughs over the summer. But even after 1,806 pilots accepted early retirement packages, the airline said in a memo it will still have more pilots than it needs to cover a flight schedule slashed by reduced travel demand during the coronavirus pandemic.

John Laughter, senior vice president of flight operations, said in a memo, “We are six months into this pandemic and only 25% of our revenues have been recovered...Unfortunately, we see few catalysts over the next six months to meaningfully change this trajectory.”

And then, a few hours later, American Airlines announced that it would furlough 17,500 union workers in October, thanks to the travel meltdown caused by the coronavirus pandemic.

That reduction comes in addition to 1,500 administrative and support workers laid off in August but continuing to get paid through Oct. 1. That’s when the government’s payroll protection aid to the airline industry ends.

The close of the six-month payroll protection program is responsible for the move, American CEO Doug Parker and President Robert Isom wrote in a letter to employees. “The coming weeks and months will be some of the most difficult we have ever faced,” they said.

“Today is the hardest message we have had to share so far - the announcement of involuntary staffing reductions effective Oct. 1. So, as Sept. 30 approaches, we have announced reductions in service, including the complete elimination of service to certain markets in early October, and today we are announcing the related reductions in our workforce.”

You can follow Jim Cramer and Katherine Ross on Twitter at @JimCramer and @byKatherineRoss. Read more from Katherine Ross here.

Latest Videos From TheStreet and Jim Cramer: