From longer lines at airport security checkpoints to lengthier delays between flights, U.S. airlines are grappling with fallout from the longest government shutdown in U.S. history, one that Southwest CEO Gary Kelly says will curb early 2019 sales by as much as $15 million.
“I will sum it up in a word: It’s maddening,” Kelly told investors during a call detailing the Dallas-based company’s goals for the year and its performance in the last three months of 2018. “Everyone needs to be on notice, on guard, that this shutdown could harm the economy and it could harm air travel. We will do everything we can to find a way to work through this slop.”
While both Southwest and American Airlines, the first of the largest U.S. carriers to report earnings, posted sales growth in the last three months of 2018 and were optimistic about the coming year, executives warned that the shutdown’s effects on the industry were impossible to predict.
[Opinion: The government shutdown is hurting the economy]
The partial closure, which began in late December when President Trump refused to sign any government-funding bill that didn’t include $5.7 billion for a wall he want to build along the southern U.S. border, is shaving an estimated $1.2 billion a week from the economy.
It’s leaving unpaid workers — including transportation security officers and air traffic controllers — scrambling to cover their bills while delaying reviews of new medicines and corporate mergers and heightening the risk of a recession. On Wednesday, the unions for air traffic controllers, pilots, and flight attendants warned of a growing risk from employees increasingly unable to work without pay.
“In our risk-averse industry, we cannot even calculate the level of risk currently at play, nor predict the point at which the entire system will break,” the labor groups said in a joint statement. “We find it unconscionable that aviation professionals are being asked to work without pay and in an air safety environment that is deteriorating by the day.”
Because of the industry’s necessary focus on safety, a shortage of Transportation Security Administration staffers who examine passengers and luggage for potential threats will likely mean longer lines rather than less scrutiny, said Doug Parker, CEO of Fort Worth, Texas-based American.
“We’re putting a strain on” workers who are missing paychecks, “and that will, at some point, result in people not being at work,” he said. “When we don’t have enough TSA agents, you’ll see longer lines. When we don’t have enough air traffic controllers, you’ll see more delays in airspace. Those would be bad things.”
While American refused to specify the dollar amount of the shutdown’s impact on air travel in January, the airline predicted earnings would climb as much as 65 percent this year, to $7.50 a share. Net income in 2018 rose 10 percent to $1.4 billion as GOP-led tax cuts buoyed the economy and a jump in fuel prices dissipated.
Profit at Dallas-based Southwest tumbled 27 percent to $2.47 billion, or $4.29 a share, last year, reflecting higher fuel and labor costs and the addition of 45 new jetliners.
