U.S. Airlines Could Be Getting Yet Another $25B Government Handout As CARES Act Expires Soon

6 Comments

Back in April the U.S. government through authorization of Congress has presented airlines with a $25B bailout to keep the country’s airlines semi solvent and all employees on payroll until September 30, 2020.

As this deadline is now coming closer and the associated CARES Act funding as well as protection for employees is set to expire in less than 60 days time a group of lawmakers are now proposing a second bailout package of another $25 Billion.

Several airlines have already gave notice to their employees that there might be redundancies on the horizon and that the near future of flight attendant jobs would be rather unpleasant giving Covid-19 protection measures, preparing employees for a wave of dismissals.

You can read our original article on the CARES package for airlines from April here.

Here’s an excerpt from the New York Times back then (access their piece here):

… The Trump administration has reached an agreement in principle with major airlines over the terms of a $25 billion bailout to prop up an industry hobbled by the coronavirus pandemic.

The Treasury Department said that Alaska Airlines, Allegiant Air, American Airlines, Delta Air Lines, Frontier Airlines, Hawaiian Airlines, JetBlue Airways, United Airlines, SkyWest Airlines and Southwest Airlines would participate. …

Now there is scrambling on all levels of government what will happen after the CARES act provisions expire and airlines are no longer bound on their employment protection clauses that forced them to keep employees on payroll. Especially in an election year, three months before election day a powder keg and no side of the political aisle wants to have the blame for mass firings.

According to the New York Times a group of 16 GOP Senators have floated the idea of yet another $25 Billion rescue package (Bailout).

A group of 16 Republican senators said Wednesday that they supported spending $25 billion to forestall tens of thousands of layoffs by airlines in a big win for labor unions that had been pushing lawmakers to pass another bailout for the industry.

In March, Congress authorized $25 billion to help passenger airlines pay salaries under the CARES Act provided they refrained from cutting jobs. But with those conditions going away at the end of September and air travel still depressed, airlines have said they could cut tens of thousands of jobs and reduce hours for other workers starting on Oct. 1.

“For these reasons, 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,” the senators said in a letter addressed to the Senate majority leader, Mitch McConnell, and Chuck Schumer, the minority leader.

The senators said their preferred policy would protect airline employees from mass job cuts through March. A bipartisan majority in the House of Representatives has already expressed support for a similar approach.

In a news conference on Wednesday, President Trump suggested he would support the proposal.

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

The airlines aren’t the only problem of the U.S. government as the CARES act helped and protected American businesses and employees as well as citizens overall from all walks of life all the way to protecting them from losing their homes due to evictions or foreclosures.

Airlines would obviously welcome free money with open arms and certainly have no problem keeping their employees – as long as the government pays for it.

The original CARES Act gave financial backing and job security to airlines and their workers for 6 months, running out at the end of September. Now with the election just a few months away I don’t believe Congress or the administration would have the stomach to deny another rescue package or a complete renewal (duplication) of the original CARES Act with some modifications that allowed the original package to be exploited by some companies and individuals.

Washington will have to do something to bring people over the winter that has especially cold prospects this year figuratively speaking, there is very little to no choice.

Conclusion

Ultimately though this is just a delay tactic. Six months later would mean the end of March 2021 by which time the world is hopefully going to be in a different place as far as Covid-19 and the overall economy is concerned. There are no guarantees for anything however and even if Covid is drastically reduced at some point the ailing of the airline and hospitality industry will be far from over.

My prediction is that the CARES Act including another round of airline bailouts will be renewed but coming spring 2021 all bets are off. There will be little political motivation for endless bailouts at that time no matter which administration will run the country by then. Of course the aviation market has more or less consolidated itself since the last financial crisis, if an airline would fold now that would likely mean a plain Chapter 11 filing and many – not all – staff losing their jobs. I can’t see which major airline could still be bought out by a competitor and merged. Not counting Alaska, Hawaiian or JetBlue.

If you enjoyed this article, get our blog updates for free!

Previous articleMarriott BreakAway Up To 30% Off Rate Plan
Next articleAirfare of the Day [Business Class] AIR FRANCE Amsterdam to Singapore from 1,380€

YOU MIGHT ALSO LIKE