American Airlines Group Inc., the biggest U.S. airline, and No. 4 Southwest Airlines Co. will follow President Joe Biden’s mandate requiring that employees be vaccinated against Covid-19, defying an order from the Texas governor blocking such actions.
The decisions Tuesday set up an immediate challenge to Republican Governor Greg Abbott by two of the state’s largest corporations. Companies with operations in Texas like the two airlines have beeen caught between Abbott’s decree and a White House measure that says federal contractors must require the shots.
American Airlines employed 117,400 workers nationwide as of the end of June and Southwest had about 54,500 staff. Both airlines have government contracts with the federal government for transporting employees and goods.
“We believe the federal vaccine mandate supersedes any conflicting state laws, and this does not change anything for American,” Fort Worth, Texas-based American said of the state’s ban.
Dallas-based Southwest echoed that statement.
“We would be expected to comply with the president’s order to remain compliant as a federal contractor,” the company said.
The Texas governor’s office didn’t immediately respond to a request for comment.
The response to Abbott’s order came a day after the vaccine issue surfaced as Southwest worked to get operations back on track after canceling 3,100 flights over four days. As customer outrage grew over long waits, some politicians linked the disruptions to employee objections to the required shots. Southwest executives and its pilots union denied that work slowdowns or sickouts were responsible.
American set a deadline of Nov. 24 for all workers to be fully vaccinated or face possible job loss. Southwest, which carries the most domestic passengers of U.S. airlines, set a Dec. 8 deadline. Both have said they would consider exemptions on a case-by-case basis.
Abbott’s move to counter the White House action came amid a national debate over vaccine mandates, which has engulfed corporate America as it tries to placate customers, employers and regulators.
“No entity in Texas can compel receipt of a Covid-19 vaccination by any individual, including an employee or consumer,” Abbott said in his executive order Monday. He plans to put his ban before a special session of the state House and Senate, which would let the Republican-controlled legislature enshrine his executive order into law.
American shares rose 1% to $20.32 as of 1:45 p.m. in New York. Southwest gained 1.4% to $52.41.
Southwest is offering employees the equivalent of two days’ pay as an incentive to get the Covid-19 shots. It hasn’t said how many of its workers are vaccinated.
“The objective here is to improve health and safety, not for people to lose their jobs,” Chief Executive Officer Gary Kelly said on CNBC.
Southwest pilots have asked a federal court to temporarily block the airline from carrying out a federal vaccine mandate until a lawsuit over alleged U.S. labor law violations is resolved. The Southwest Airlines Pilots Association in an Oct. 8 filling asked for an immediate hearing. The union represents 9,000 pilots at the carrier.
