Republican Senators Push For Second Airline Bailout

Filed Under: Misc.

Over a dozen Republican senators are now onboard with US airlines getting a further $25 billion in payroll support…

16 Republican senators back second airline bailout

The CARES Act currently provides roughly $25 billion in payroll support for US airlines. The government is essentially covering a majority of the payroll of US airlines.

However, this support expires as of September 30, which is why most major US airlines are planning huge furloughs as of October 1. Over 70,000 US airline employees have received WARN Act notices, informing them that they could be laid off in a couple of months.

Now 16 Republican senators wrote a letter in support of a clean extension of payroll support for airlines. This puts pressure on the senate to include $25 billion in payroll support for airlines in a final aid package, to be finalized soon. In fairness, this has received support from some Democrats as well, though what’s new here is that the support came from some Republicans yesterday.

As the letter states:

“We support a clean extension of payroll support for passenger air carrier employees included in the CARES Act to avoid furloughs and further support those workers.”

Yesterday President Trump even spoke out in favor of this concept:

“We don’t want to lose our airlines. If they’re looking at that, whether they’re Republican or Democrat, I’d certainly be in favor.”

Personally I think he’s missing the point here — this payroll support has nothing to do with saving airlines that would otherwise be “lost.” Rather it’s about pushing off layoffs for another six months.

Airline executives and airline labor unions have been hoping for a further bailout, so this support is no doubt something that they welcome.

Delta 737An airline payroll support extension is gaining traction

Why airlines shouldn’t get this payroll support extension

Let me start by saying that I think the US lacks a safety net, and that I wish we’d see the US providing more support to all Americans right now. That being said, I take huge issue with the concept of a clean extension of payroll support:

  • Current estimates suggest that air travel won’t recover until 2024, so pushing off layoffs by another six months won’t actually preserve jobs, it will just push off layoffs by a further six months
  • Airlines have gotten tens of thousands of people to accept voluntary leave packages, so workforces are already much smaller than they were several months ago; if payroll support is extended, shouldn’t the amount reflect that, as airlines would essentially be profiting off of this?
  • Again, I support the government doing more for everyone, but why should the salary of a $250K per year airline captain be preserved for another six months, while those working in other industries get very little?

In summary, I’m all for the government providing some support to US airlines, given the extraordinary circumstances. However:

  • I find the concept of a clean extension of payroll support for another six months to be pointless, since it won’t actually preserve jobs, as travel demand won’t recover in six months
  • A clean extension is downright fiscally irresponsible, as airlines would be profiting off of this, since their workforces are already smaller; Southwest has gotten 28% of employees to accept voluntary leaves, so why should they get just as much payroll support for the coming six months as they did for the last six months?

There’s nothing fiscally responsible about this, if you ask me…

This will only lead to layoffs six months down the road

Bottom line

16 Republican senators are now pushing for a clean six month extension of the current airline bailout, which would provide another $25 billion in payroll support. While I’m not opposed to airlines getting some form of government help, I think a clean extension of the initial bill is ridiculous.

This doesn’t actually address the fundamental problems. What will happen in six months, since clearly demand won’t recover over that period of time? Furthermore, shouldn’t the amount of payroll support be significantly lower, since airlines will have less payroll with smaller workforces due to voluntary packages that have been accepted?

I’m curious to hear what you guys think, whether Republican or Democrate — do you support a “clean” extension of this bill, for another $25 billion in payroll support?

Comments
  1. As we, as taxpayers, are funding this, no. Why is one industry getting more support than all the others significantly hit (restaurants, cruises, hotels, stadiums, sports and so on). This is nothing more than a reflection of lobbying power and political gamesmanship

  2. Moderate/Conservative here. Agree with you 100%. It’s not saving an industry or any companies. Let the airlines do their layoffs and stabilize. If they need further aid to stave off bankruptcy/mergers then reconsider a bailout.

  3. Adding on… that nothing exemplifies this more than the fact that the past week saw 1.2M NEW jobless claims this past week vs 800k new employed, and almost 20M more people unemployed now than the start of COVID.

    While I feel for airline employees, focusing on 70K is only 0.4% of the 20M additional unemployed and demonstrates a focus in the wrong place and on the wrong number.

  4. I’d rather fund Uber drivers, restaurant servers, small businesses and blue collar workers. My sympathies for airlines are gone especially when they lose your luggage and still charge you $30. It’s time for the airlines to get a dose of their own medicine. No other large organization who provide services can get away with treating customers like garbage like airlines do.

  5. How about survival of the fittest? No one will bailout my company our the ones my wife and children work for. That bailout money should be shared amongst the non-working American public. Not a $600 extra payment for unemployment but maybe an extension of unemployment benefits for a few more weeks.

  6. It’s easy for you to not be in favor of saving airline jobs being you do not work for an airline, however there are more employees other than airline pilots at an airline. This should be extended another 6 months when perhaps there is a vaccine and travel demand returns somewhat than what it is now. If you worked for an airline, you’d want this extended; 6 months of work vs being furloughed can make all the difference for 100,000 employees in the industry at risk of losing work come October 1.

  7. I do think that payroll support should be extended, but at 1/2 of the previous level of funding. Airlines have gotten smaller through voluntary buyouts, so they should not need the previous level of funding to prevent layoffs.

    I also think payroll support should be provided to Amtrak, which has not gotten any type of special operating funding since the pandemic began.

  8. I wish we’d see the US providing more support to all Americans right now.
    ————————————————–

    We (you and me) have spent several Trillion (with a T) dollars to provide support to Americans–including, but not limited to, the extra $2,400 per month that’s been paid (and will likely continue to be) to the unemployed over and above their current benefits. The average person on unemployment was receiving $4,000 per month from the government.

    I’m sure you get some sort of “woke points” for saying we should do yet more, but I’m not sure you have a view of the whole picture. If you meant we should provide a health care safety net, then just say that.

  9. It’s not a bailout. It’s payroll protection for employees. The alternative is to lay everyone off, force them on to unemployment, and further harm the economy. Most people don’t realize that these airlines not only move people, but they move US mail, food, medicines, and much more. Without them, commerce stops.

  10. @ GetReal — No, the alternative isn’t to lay “everyone” off, the alternative is to lay off a realistic number of people when you consider that airlines won’t recover until 2024, by current projections. I don’t want to be callous here — I feel horrible for the people being laid off, and I get it’s really, really tough. That’s the case for so many people, from restaurant servers, to those working in retail. I think they deserve more support from the government. I just don’t think pushing off the inevitable by a further six months solves anything.

    And I’ll actually pose that question to you — if this gets renewed, what happens after six months? Another extension?

  11. @Sam, exactly. I’m not necessarily opposed to additional funding for airlines. However, the mental gymnastics for republicans on infrastructure is dizzying. They support airlines, but won’t spend a cent on other mass transit.

  12. Hold on a minute. Isn’t the Republican Party the Party of Chicago-style Capitalism aka “no government meddling. Let the market regulate itself”? They chose to do this instead of bailing out renters to prevent mass evictions?

  13. Neither Republican nor Democrat, but a Public Finance Professor here. This is what we call internalization of regulatory cost, just the other way round than usually. If regulators, such as the US government, ban or at least restrict travel for public health reasons, such a decision comes with social benefits (perhaps less infections), but also some individual costs (airlines making losses). So it’s evident that those receiving the benefits (the society) also need to pay for it. That’s why I’m strongly in favour of this proposal – from a professional perspective, as an economist.

  14. @Andy I appreciate your perspective, but I’m generally curious why this should be applied to airlines and not other directly impacted industries (bars, restaurants, entertainment, etc.).

    These industries also were shut down not by economic factors, but by government regulation as well.

  15. @ Andy;

    What you state is general to all impacted sectors. What Gary is complaining about (which I support) is why treat airlines more favorably when it’s clear we have too much capacity.

    Small businesses who got PPP loans can’t have the loans forgiven to the extent it’s used on salaries above $100k. Why treat airlines differently?

    Not much different from the special deal that exempted religious organizations for the size requirements and gave the Catholic Church $1.4 billion.

  16. These Republicans are all just damn commie socialists. They should move to Cuba.

    /irony

  17. No more bailouts. What do they have to show for the last $25B? The airlines are still planning to lay people off on 10/1 – literally the day after the bailout ends. If they really want to help airline employees it’s probably cheaper to just pay the laid off employees their salary for 6 months. Surprised Republicans are signing up for this, thought they were supposed to be the party of free market capitalism.

    @Andy I don’t understand this logic. The government also mandates factories not to dump waste into our waterways. The social benefit is that we have cleaner water but I don’t think I should have to compensate the factory for not polluting. Also please explain where this money is coming from. I think small businesses, hotels and restaurants are also impacted by these shutdowns and also deserves some free money to keep them going.

  18. @Peter SFO: I totally agree that small businesses, hotels and restaurants also need to ve compensated for their losses due to government imposed restrictions. There needs to be a correct price tag on governmental public health measures.

  19. @beachfan, @Jerry I also agree with you. All regulation cost needs to be compensated – no bias in favor of airlines whatsoever.

  20. Sorry to all individuals who work for the airlines, but I don’t think it’s fair for the taxpayer to subsidize otherwise unemployed individuals with full pay and benefits, while other unemployed have to live on unemployment with no benefits.

    Also, this “economic stimulus” stuff is a waste of money. The economy is not the problem, it’s the symptom. COVID is the problem. You can provide all the “economic stimulus” you want, but the economy will not recover until people feel safe to re-engage in the economy. If you want the best results for the money, spend money on communicating a CONSISTENT message for prevention. Spend money developing on a reliable testing system. Spend money on communicating that if you should get COVID, the treatments available and how they have improved since the onset. Finally, spend money developing a vaccine.

    COVID is here and its going to stay in some form. So, let’s get people comfortable as they can living in an environment with COVID. With that “comfort”, people will re-engage in the economy.

  21. Obviously, I realize that compensating each and every business will cost the government an enormous amount of money, which ultimately goes to the tax invoice of each and everyone of us. This leads to the question how much are we (all of us) willing to pay to avoid x number of COVID deaths. This question has always been asked when it comes to cancer or hepatitis type C. But we also need to ask the same question for COViD. For me, I’m prepared to pay the same amount to avoid a COVID death as I am to avoid a cancer death.

  22. @Andy
    Can you elaborate on how the government would pay for such relief? Even with deficit spending, they still have to pay back at least part of it or even the interest to keep borrowing. Would they raise taxes on the businesses once it’s over? Is it tax the rich or cut government programs? The money has to come from somewhere.

    Also, shouldn’t the government’s responsibility be to the individual rather than the corporations? Like Ben said, I don’t see why Execs and pilots should continue to get paid six figures while a restaurant server gets $600. There should be a safety net but there should be no obligation to maintain an individual’s standard of living especially if it’s much higher than average.

  23. These 70,000 airline employees already exceed the entire 50,000-55,000 employee coal industry, which the administration campaigned on saving. The only reason they’re considering this measure now is because there’s an election coming up, and it’s not looking good for the majority. The more forward-thinking measures would be to fund airline employees’ job retraining and layoff packages, which are currently at risk in an airline bankruptcy. Of course, these wouldn’t provide as much immediate political benefit.

  24. @Andy
    You’ve lost me. How much/what are you paying for an individual in society to avoid a cancer or HepC death? I come from this field and this comparison baffles me. Especially given there is no single payer insurance, patients do not get equal care when they are on Medicare compared to private insurance. People don’t even get the same quality doctor depending on their insurance provider. By that logic, that $25B should be going to a single payer insurance system because far more people will die from cancers than they will from COVID.

  25. There is one reason this idea is being supported now – election in Nov. 70k laid off airline workers = more bad news for politicians currently in power. Of course they realize this only delays the inevitable.

  26. Ben, those captains worked for 25-30 years to become captain and reach to their current payscale. Your comment really seems like they dont deserve that much salary.

  27. I agree why should my tax dollars go to prop up airline pilots making $250+ per hour! Let the airlines to their layoffs, those that are laid off can qualify for state unemployment and what the extra will be to be decided on by congress. NO MORE tax money to pay for pilot wages and such! Let them go bankrupt and re build themselves. It my also be time for the government to re-regulate the market place. It’s a mess people but we can’t keep blowing money here because at the end of the day these airlines will go bankrupt and shareholders will lose it all!

  28. What this country needs more than a second airline bailout (or really any economic stimulus) is a competent virus response. Demand will return organically once the threat of infection has been decreased, but since we care more about freedumb than common sense, we’re even further from that than we were in March.

    @StevenK — Sticking it to the airlines simply means sticking it to the employees. The company passes on the financial consequences to the workforce, so when you talk about levying your personal grievances on the industry, you’re really just harming airline employees. At least recognize it for what it is.

  29. @Peter SFO: If society is willing to pay, say USD 100,000, to avoid a cancer p/HepC death (e.g. through health insurance), I assume they are also willing to pay the same amount to avoid a COVID death (e.g. by banning international flights or closing down restaurants and therefore leading to losses for individual businesses). Therefore, I welcome if such measures come with a price tag. If banning international flights saves 1000 lives, based on the assumption above, this is worth 1000 x 100000 = 100,000,000. Or the other way round: If the government spend 1bn on compensating airlines for not flying internationally, this should save 10,000 lives.

    I know many get offended by such calculations. But that’s exactly how health insurers determine how much they are willing to pay for a cancer or HepC drug. And if the price is any higher, they won’t pay.

  30. If only the single mom with two service jobs that don’t exist anymore had a team of lobbyists who could get her a deal like that!

  31. As a conservative, Republican pro Trump voter who favors smaller government, as well as an airport employee I am very torn here. I understand everyone’s point that this just delays the inevitable lay offs, and if it was another industry I would say tough you know what. Of course, when it is YOUR industry and job you feel differently.

    Perhaps a better solution is not to mandate that airlines retain unneeded employees, but the funds are used for enhanced severance/post employment benefits.

    (BTW – if Biden has a better solution to COVID, I am anxiously awaiting to hear it. So far I haven’t)

  32. @David:
    I don’t think there is a ‘good’ solution to this problem. However, I do know what bad solutions look like. Abdicating a federal role, injecting light or bleach into the body, etc.. These are examples of bad solutions.

  33. Why should airline employees have an advantage over other people that are unemployed. Most airline workers are not working and are getting paid 100%. Everyone else that is unemployed is getting barely anything, especially now that the 600.00 is gone. Airline workers are safe till Oct, everyone else was only safe till July 30. I don’t understand how they see this.

  34. “This puts pressure on the senate to include $25 billion in payroll support for airlines in a final aid package, to be finalized soon. In fairness, this has received support from some Democrats as well, though what’s new here is that the support came from some Republicans yesterday.”

    Title of the post: “Republican Senators Push For Second Airline Bailout“

    A more accurate and less biased post title would be: “Republican Senators Join Democrats In Push For Second Airline Bailout”

    Just saying.

  35. Why would a rational pilot take early retirement, a temporary leave or reduced hours when the government will keep you on at your full $300k? Why should all airlines be propped up , when some were clearly better managed than American, oops I mean than others? Why keep all airlines in business when cutting capacity would help the survivors? Why give airlines another cent till shareholders are wiped out?

  36. We could extend that beyond the airlines. And then do this for longer than just a couple of month. And then we could finally rename the United States of America to the People´s Republic of America and replace recently destroyed statues with e.g. comrade Marx or Lenin or Bernie…

  37. @ David
    (BTW – if Biden has a better solution to COVID, I am anxiously awaiting to hear it. So far I haven’t)

    LOL

  38. The Republican majority (president and Senate) are in support of handing out free money to select private businesses while giving tax reductions to many of the same. Then they fail to present a plan to reduce exposure of the virus by the same brain dead supporters of theirs. How about having the stable genius that aced the test and his fellow Republicans sit down with their equally ignorant Republican Governors and start mandating masks and social distancing before you start another round of bailouts. You keep giving money and not attack the cause. Such a poorly run government.

    @The nice Paul: exactly!!

  39. @Other Ray

    The Democrats package is filled with funding for non Covid related issues. They are truly doing a disservice to the American people.

    I’m a centrist all that matters is getting our grandchildren to Mars.

    25 billion is not much when dealing in terms trillions of dollars and this airline bailout is more worthwhile than throwing additional free money at people out of work many who aren’t even struggling to begin with. Spare me the BS. Most of you are not out of food or facing eviction.

  40. @D3kingg: it ends up as Republican bill. They own Presidency and Senate so nothing approved without them. The bill is a waste and people need it more than corporations. Face it: the US is Socialist now.

    And you can stick the finger you are pointing about food and evictions at your crap farmers and military that suck up billions and do zero. You and your biased BS.

  41. I am an airline employee, and won’t be affected initially from the coming layoffs. However, I have endured paycuts and loss of benefits after 911. This will be a likely scenario in the near future. Where is it written in stone that load factors won’t improve until 2024? Keep in mind there is a possiblity there will be a vaccine available before then. I am in favor of a Gov’t grant to ensure Airline employment in the near term. The airline travel Industry employs ESSENTIAL workers. Without the airlines, not only will people not move, nor will essential cargo, including the mail will not move. However, I do agree that the amount the Airlines receive should be gauged by the amount of people that will see layoffs.

  42. @D3kingg – you conveniently ignore the Republican bill had $1.75B for a new FBI HQ. Would you similarly argue that “they are truly doing a disservice to the American people” in that case?

  43. There have been 3 financial bailouts for the US airlines in the past 20 years totalling tens of billions of dollars.

    Those same Republican senators will be out there next week complaining about how other countries subsidize their airlines and claim unfair practices.

    American socialism is alive and well, so is hypocrisy.

  44. I agree with what a lot of people are saying here – the airline industry is by no means the only one in serious trouble, but it’s already received aid far out of proportion with its size and number of jobs. The entertainment industry, for example, is around 2.4 million jobs and has a market value of around 700 billion dollars in the USA, and has received no targeted aid whatsoever. A vast majority of those people are out of work – some film production has resumed in a limited fashion, but theatre is gone at least until 2021 and a lot of ancillary jobs are also gone. And while the airline industry is arguably more essential than entertainment, that doesn’t change anything for the people out of work and suffering.

  45. @ Peter SFO, your last statement answered your own question. We all know many more die from cancer, car wrecks, etc so why was C-19 elevated to the point of stopping the earth spinning on its axis? Rhetorical question but finally many more are aware of the absurd over reaction to this pandemic….remove the deaths in nursing homes and those over 80 years with co-morbidities and it was similar to a severe flu season. Yet, we destroyed the world econmy.

  46. @ Paul A, that 2024 prediction was a ridiculous warning from IATA who has an interest in keeping the panic porn alive for its industry members to get more bailouts….And it worked! Their timeline should be ignored.

  47. @Tim: and here I was thinking the idiot Fox News group had finally stopped the comparison to the flu, comparing deaths to other diseases and fatal accidents, and questioning the efforts involved in containing the virus. But I was wrong. Stupid is just like the virus, we just don’t know the full depth and impact on humans and it continues to evolve. Please explain why your denying Republicans continue to try and stimulate the economy while doing nothing to stop the spread. Reelection?

  48. Even if there is an extension of airline support, it certainly needs to be modified to make sure that the funds are being used appropriately to safeguard consumer interests versus benefit airlines and special interest groups.
    Agree that there are other industries that should get support as well and moreover extending this support is just bad business.
    We all know that the industry is undergoing a structural change and airlines need to adapt their business model.
    Extending this support package is incentivising airlines to preserve a structure which is no longer relevant to market realities.
    How can this be rationalised?

  49. Hello there, I’m a flight Attendant and Im gettind furlough October 1st. I make 25k a year And There are thousands like me that their families depend on this salary. Somebody mentioned that if they pass the bill they will cover a pilots 250k salary. That’s not accurate because if a Pilot is making 250k they have enough seniority and they are not facing the furlough.
    So yes, this bill will help thousands employees that make less thank 40k.

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