The Massachusetts Port Authority is trimming about 25 percent of its workforce through layoffs and voluntary buyouts as it reacts to an unprecedented plunge in air travel at Logan Airport due to the COVID-19 pandemic.
The port authority avoided layoffs in its first big round of budget cuts in the spring, but not this time. The downturn in jet passenger traffic has been far more protracted than Massport executives anticipated, forcing them to plug a new shortfall exceeding $100 million in this fiscal year’s budget.
“We are trending below our worst-case, business-activity forecast at Logan Airport,” Massport chief executive Lisa Wieland told the port authority board on Thursday. “It’s hard, and I hoped we wouldn’t be here. Unfortunately, we are.”
Rather than rebounding as Wieland and others had hoped, the number of passengers actually declined in August from July levels, and again in September. Only about 633,000 passengers were tracked through Logan in September, an 82 percent plunge compared with the same month a year ago. The number of flights, meanwhile, was down 64 percent, year over year.
Logan remains one of the hardest-hit airports in the country, according to data from the Airlines for America trade group. The number of scheduled passenger flights in Massachusetts, predominantly at Logan, dropped 57 percent this month compared to November 2019. Only one state, New York, and Washington, D.C., had a larger decline in flights.
Massport’s board unanimously approved the job-cut plan at the monthly meeting Thursday. While the port authority did not give an exact number, 25 percent of its 1,300-person workforce would be about 325 employees. Massport employs about 700 unionized and 600 nonunion employees.
The cuts represent what is believed to be the biggest reduction in force for Massport in its seven-decade history. By comparison, during the tough times that followed the Sept. 11, 2001, terrorist attacks, the port authority trimmed about 10 percent of its payroll.
The reductions are taking place across all wage levels and departments. They involve four programs: voluntary retirements for unionized workers, voluntary separations for administrative employees, layoffs among administrative and nonunion employees, and furloughs for the remaining nonunion staff earning $75,000 or more. The furloughs, to be taken in mid-2021, range from three to 10 days of unpaid leave, depending on the worker’s salary. Wieland, who will earn $360,000 in 2021, volunteered to take 15 days of unpaid time.
The voluntary buyouts, which offer one-time severance payments of at least $20,000, will begin immediately, while the layoffs are expected to start in January. The number of layoffs will depend heavily on how many employees opt for voluntary buyouts.
The sharp decline in air travel this year has hammered Massport’s main revenue sources at Logan, including landing fees, terminal rents, and parking. Massport has other operations, such as its cargo and cruise terminals in South Boston and its airport in Worcester, which is no longer served by any commercial flights because of the pandemic. But they each represent a small portion of the agency’s annual revenue.
State officials don’t expect a full recovery for several years, particularly in business travel. As a result, Wieland is trying to solve for an anticipated $400 million budget hole across a three-year span.
“We have to be realistic about the right size for our workforce,” said Stephanie Pollack, a Massport board member and Governor Charlie Baker’s transportation secretary.
In the spring, the port authority pared its operating budget from $900 million in 2019 to $600 million for this fiscal year. But in October, the agency adjusted it again, to $540 million, after traffic projections fell short of already-lowered expectations. Combined with $66 million in rent deferrals for struggling airlines, the port authority suddenly faced a new financial gap of as much as $126 million.
Logan’s cratering fortunes represent a stark about-face for what was a fast-growing airport, particularly with regard to international travel.
“It was easy to be a board member,” reflected Sean O’Brien, a Massport board member who leads the Teamsters Local 25. “The economy was good. Travel projections [were] at an all-time high.”
Then the pandemic hit, and those travel projections shifted dramatically. Massport is now bracing for fewer than 10 million passengers in its 2021 fiscal year, a level not seen at Logan since the 1970s. In 2019, more than 42 million people traveled through the airport.
“No one wants to be putting people out of work,” O’Brien added. “We’ve mitigated as much damage as we possibly can. [The workforce reduction] is the responsible and right thing to do at this point in time.”