Aviation unions angry about stricter airline bailout

Forcing airlines to receive 30% of their federal rescue
dollars via loans might be a better deal for taxpayers, but airline worker
unions aren’t happy about it. They say that more airline pain could eventually mean
more layoffs.

In the Cares Act, Congress authorized $25 million in rescue grants
for U.S. airlines to be used for keeping employees on the payroll. Treasury
Secretary Steve Mnuchin subsequently decided to convert a portion of that $25
billion into low-interest loans. 

Airlines that accept the grant/loan rescue package cannot
lay off, furlough or cut pay or benefits for any employees through the end of
September, but the unions are worried about what will happen after Sept. 30.

“The Treasury Department’s decision to transform direct
payroll aid into a loan program creates a terrible precedent and endangers
workers’ careers,” reads a statement put out by the unions. “We urge Congress
to use its oversight and legislative powers to remedy this distortion of the
law and ensure frontline workers are not further harmed by this crisis.”

The statement was issued by the Association of Flight
Attendants-CWA, the Air Line Pilots Association, the International Association
of Machinists and Aerospace Workers, the Communication Workers of America, the
Transport Workers Union, Unite Here and the Transportation Trades Department,

On Tuesday, 10 of the 13 largest U.S. airlines agreed to
accept payroll assistance under Treasury’s new formula, in which 70% of the
money will provided as grants while 30% will be provided as low-interest,
10-year loans. 

American, Delta, United, Southwest, Alaska, JetBlue,
Frontier, Allegiant, Hawaiian and SkyWest agreed to the arrangement. Three
other carriers — Spirit, ExpressJet and Republic — are still in discussions
with Treasury. 

Trade group Airlines for America expressed concern that the
original plan for airlines to get $25 billion in grants was altered.

Analysts from J.P Morgan called Mnuchin’s change a “significant
negative development for the sector.”

J.P Morgan said airlines likely will need additional help
after Sept. 30.

“Unfortunately, we simply don’t see any way for most U.S.
airlines to avoid massive layoffs unless the industry-specific payroll
protection grants/loans are extended,” the J.P. Morgan analysts wrote. 

In an analysis this week, Cowen projected that the nine
largest publicly traded U.S. airlines would shrink by approximately 100,000
employees this year.

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