outdated technology, and an inefficient plane-routing system. Nekouei lays out a familiar scenario in the letter: a refusal on behalf of the executives at the top to invest capital in a company's infrastructure in order to juice short-term profits, leading to consequences down the line. In the letter, Nekouei states that the Pilot Association “has been beating this drum to management for nearly a decade pleading with them to spend the necessary capital to prevent the ultimate consequence someday. As CEO, Gary Kelly made a conscious decision to make the less-than-necessary investments in tech upgrades in favor of maximizing shareholder return because, well, 'our tech’s been working OK for 20 years.'” It’s frightening that an industry like air travel, which is so dependent on the precision of the crew and equipment, is now comfortably in the domain of corporate cost-cutting. If executives are willing to cut corners on staffing and technology, then it is only a matter of time before corners are cut on the planes themselves. This is the kind of erosion in integrity and trust that greed can ultimately lead to. If powerful actors aren’t truly held to account, then what is to prevent them from trying to get away with a little bit more? If the airline executives aren’t listening to their pilots, the individuals literally in the cockpits, then who will they listen to? Air travel is not exactly a low-stakes industry, so it’s worrisome when profit is clearly winning out over quality. It’s no secret that the airline industry, particularly in the last decade, has been wildly dependent on stock buybacks to give the appearance of greater economic viability. In a stock buyback, a company will choose to purchase its own shares from shareholders, and it will take these shares entirely from the market. That gives money to shareholders and lowers the number of shares outstanding. This will temporarily increase, for example, the reported earnings per share because you are basically dividing the same earnings number by a lower number of shares outstanding. According to an article from Business Insider, “Stock buybacks have been particularly prevalent in the airline industry over the last ten years or so. Airlines like American and Delta poured billions into stock buybacks in the years before the pandemic. For instance, in 2019, American spent $12.6 billion paying its employees. But, from 2013 to 2019, they spent $12.9 billion on stock buybacks.” According to Sara Nelson, the international president of the Association of Flight Attendants, "There was so much pressure on the airlines to announce these huge stock buybacks as they were trying to encourage people to invest in airlines again. But a huge portion of the profits went to stock buybacks that don't reinvest in the company, that don’t contribute to the long-term success of the airline, that don't invest in the workforce." When the pandemic hit in early 2020, there was significant pushback against the airline industry asking for billions in bailout money when they had been pouring billions into stock buybacks. For instance, in March 2020, Bloomberg found that the largest airlines had spent a stunning 96% of their cash flow on stock buybacks over the previous decade. At the beginning of the pandemic, Nelson and other industry advocates pushed for a ban on stock buybacks for airline companies. However, they were only able to secure a temporary ban that ended in August of 2022. Nelson says that, while it’s incredibly irresponsible and short-sighted for airline companies to put initial pandemic profits directly into stock buybacks, it has become the expected modus operandi for the industry, completely free of consequence. "Congress should be looking at what it looks like when you actually have a company focused on the business," she said, "and not constantly having pressure from investors to siphon off those profits for shortterm gain for investors and long-time harm to the company — direct harm to the people on the front lines and the customers who are trying to get a service." Issue 4 • 2022 19
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