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Jobs the Main Focus As Congress Considers Aviation Bailout
As airlines across the United States feel the increasing weight of the COVID-19 pandemic on sales, Congress is considering a $58 billion bailout that they say should prioritize the preservation of jobs. Lawmakers say that any money airlines receive should come with conditions that no job is lost at the expense of bailing out shareholders.
“The [bailout] money has to be used for the continued operation of the company,” said Representative Rick Larsen (D-Everett) who chairs the Aviation Subcommittee of the US House Transportation and Infrastructure Committee. “It’s not to be used for anything else. Executives don’t get bonuses. Shareholders don’t get dividends. There are no share buybacks.”
“Our motto is this: workers first,” Senate Minority Leader Chuck Schumer (D-NY) told MSNBC. “We know we have to keep [the airlines] going. We don’t want to give them money unless they keep all their employees, don’t cut salaries of employees and these buybacks infuriate me. We should not be allowing them to do buybacks or raise corporate salaries.”
Meanwhile, Senator Maria Cantwell said in an interview with The Seattle Times that Senate Republicans agree that any bailout must cap executive pay and end dividend payouts and share buybacks.
According to Larsen, the airlines’ financial struggles emphasize the need to protect the workers, who are more vulnerable. American Airlines has canceled over 55,000 flights scheduled over the next month and grounded 450 planes. Meanwhile, United has reported that it has flown around 144,000 passengers per day throughout this crisis compared with 1.5 million a year ago. JetBlue is taking in less than $4 million per day compared with $22 million last year, and 13,000 Delta employees have agreed to take voluntary leave.
“Our revenue outlook continues to deteriorate in the short term with the decline in travel demand,” Delta CEO Ed Bastian said in a note to employees. “We’re now projecting our June quarter revenues will be down by $10 billion compared to a year ago – an 80% reduction.”
In an industry that already has tight profit margins, it’s easy for low-wage workers to fall through the cracks. Since they’re easily replaceable, airlines can cut jobs or slash pay to make room to keep an airline afloat while funneling any extra cash to executives.
In addition to cutting capacity and sending staff on unpaid leave, airlines have also been reluctant to take new deliveries to avoid the fees that come with storing them. As airlines have already moved to ground large portions of their fleets, any additional storage fees add up.
“Whatever decision is made, it’s got to be made to ensure the safety of the workforce,” Larsen said on the estimate that Boeing, the American aircraft manufacturer, may need to shut down manufacturing in response to government-mandated self-isolation periods and lower delivery demand. “The impact of COVID-19 on the economy is already devastating. I don’t know what word is worse than devastating, but that’s what it would be if production had to be shut down even for 14 days.”
“We have to make the right decisions to protect people’s health,” said Eric Fanning, CEO of the Aerospace Industries Association, which represents Boeing and many of its US suppliers as well as a number of defense manufacturers and contractors. “But we also have to protect jobs so they are there when we get through this.”
Jon Holden, the president of the International Association of Machinists District 751, which represents Boeing mechanics, revealed the human cost of the Coronavirus’s impact on jobs. He told The Seattle Times that even though a number of his members are calling on Boeing to shut down their plants, the effects of doing so could be devastating.
“This union membership includes 32,000 families that depend on their paychecks to survive,” Holden said. “If we demand that operations be shut down, we have no way of knowing how long a shutdown will last and how much pay members will receive.”
This issue is the driving force that lawmakers are leaning on to protect workers. As uncertainty around the future of the Coronavirus continues, nobody knows when work will resume normally and when companies like Boeing, American Airlines, United and JetBlue will have a steady cash flow with which to pay their workers again.
Larsen says that, in addition to protecting workers, any airline bailout also has to prevent airlines from falling back into bankruptcy again in a few years. He believes that providing airlines a base to continue their unprecedented pre-Coronavirus growth will prevent workers from facing more layoffs, pay cuts or job insecurity in the future. The bill that the House is debating will require aviation companies to take the government’s assistance to “continue to pay their workers and provide benefits and continue their obligations to people on pensions.”
Over the past few weeks, thousands of airline employees have already faced layoffs or been asked to go on voluntary unpaid leave. Trans States Airlines and Compass Airlines announced they will fold next month, new hire classes at American and United have been halted. United has also announced thousands of layoffs of its own.
“While many in Washington, DC, now realize the gravity of this situation, time is running out,” United Chief Executive Officer Oscar Munoz and President Scott Kirby said on Friday in a memo to employees that warned job cuts could start by March, 31.
Despite Democratic support for airline bailouts, Republicans in Congress are more cautious about offering airlines a bailout. They say that any bailout would be part of their overarching $1.3 trillion stimulus package, but that likely won’t be ready until next week. President Donald Trump, nevertheless, says that he’s okay with forbidding buybacks as a condition for a bailout.
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