Jeffrey Baumert
Considering just how significantly the U.S. airline industry has been affected by COVID-19, it seems safe to say there have been few advisory firms whose clients have been as affected by the pandemic as Retirement Advisors of America, an RIA that specializes in serving pilots, flight attendants and other members of the airline industry.
Clients who have been "greatly impacted" by COVID-19 include "those who are looking at the end of their career," along with "those who are at the beginning of their career," but then there's also everybody in between, according to Jeffrey Baumert, president of RAA.
About 96% of RAA's clients are members of the airline industry, the "vast majority" of them pilots, he told ThinkAdvisor in a phone interview.
International flying has been "drastically reduced" and "you're looking at airlines really changing who they are and talking about reducing" their staffing, he said. He pointed as an example to recent published reports saying United Airlines warned about 36,000 employees, including pilots, flight attendants and others, that their jobs may be cut on Oct. 1.
"For certain, October 1, there will be literally tens of thousands of airline people that will be out on the street," Baumert warned, adding how many pilots and other airline workers lose their jobs will largely depend on how many accept early buyout packages.
Although U.S. airlines that accepted federal aid under the Coronavirus Aid, Relief and Economic Security (CARES) Act agreed to not cut jobs or salaries of employees until Oct. 1, it is widely expected they will slash jobs and pay after that.
The big dilemma right now for many RAA clients near the ends of their careers is whether they should accept early retirement packages being offered by the airlines they work for or not, according to Baumert. They have to figure out if these "early-out packages make sense for them or not," depending on their specific circumstances, financial and otherwise, he told ThinkAdvisor, noting his firm's advisors are helping them figure that out. Adding complexity to the situation is that "each airline's early-out package is slightly different," he added.
On the other hand, there are many younger pilots who have been working for an airline for five years or less, and they, in some cases, "are looking at being out on the street" potentially if they lose their jobs, he said.
Meanwhile, just about everybody is being hurt by the reductions in pay across the sector due to reduced flights and hours, he pointed out.
