August 18, 2022 –
The Associated Press recently published insight featuring Charles Tharp, Professor of the Practice in Management & Organizations, discussing labor union pressure on airlines to hire more workers rather than buy back stock.
From 2014 through 2019, four of the largest U.S. airlines spent more than $39 billion on stock buybacks rather than investing in employees and passengers. Under a federal pandemic aid program, airlines are currently prohibited from buying back their own shares. However, that ban ends on September 30. Workers’ unions, including pilots, flight attendants, mechanics, baggage handlers and other employees, are urging airlines to refrain from buybacks until they fix their “operational meltdowns” and reach new labor contracts, with many demanding substantial wage increases.
“When companies approve buybacks, ‘it does look like I’m choosing to serve shareholders instead of employees,’ he said, ‘but that assumes you would give the raise to employees if you didn’t buy back shares, which probably isn’t the case.’”
Charles Tharp
Professor of the Practice, Management & Organizations
Stock buybacks are often viewed by organized labor as widening the gap between workers and wealthy investors, while corporations view them as a way to reward shareholders by reducing the number of shares and making the remaining shares more valuable.