U.S. Airlines To Receive Yet Another $14 Billion Windfall As Payroll Support From Congress, American Scraps Furlough Plans

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More than half a year after the first CARES Act expired which provided U.S. airlines with a financial lifeline during the Coronavirus pandemic and three months after the last $15 Billion Christmas present the U.S. Congress has approved yet another $14 Billion to support the airline industry.

Yesterday Congress passed the controversial US$1.9 TRILLION Coronavirus Relief bill but the biggest winners aren’t the citizens who after months of waiting for support receive another $1400 payment, it’s once again U.S. airlines.

Congress has argued for several months over new Coronavirus relief for the public, businesses and the transportation sector among other industries and on Wednesday the House narrowly approved the bill in a 220-211 vote (the Senate vote was even closer with 50-49) paving the way for $1.9 Trillion in coronavirus assistance once the bill is signed by the President. Yes, Trillion – a 1 with 12 zeros after it!

American Airlines CEO Doug Parker was quick to gloat about receiving new cash that will protect the 13,000 American workers the airlines sent furlough notices to in February:

These employees of American now have job security until September 30th compliments of the U.S. taxpayer of this and the coming generation.

As NBC reports roughly 13,000 employees of AA that have been threatened with being furloughed are now safe until September, through the bill that’s dubbed the “American Rescue Plan Act of 2021” which includes $14 billion for airlines.

Thousands of American Airlines workers who recently received furlough warnings will no longer have to worry about their state of their jobs due to the $1.9 trillion COVID-19 relief bill that was passed by Congress Wednesday.

American Airlines CEO Doug Parker and President Robert Isom made the announcement in a letter sent to 13,000 employees shortly after the bill was voted on.

“To those who had received notices warning of furloughs: those are happily canceled– you can tear them up!” the letter read.

“If you see your local Congressional representative on a flight, be sure to thank her or him for their work this past year and for recognizing the noble work you all do every day,” it continued. …

I can’t help but wonder what the average local shopkeeper would tell his or her local Congressional representative if they’d meet on the street.

This is the third time the U.S. taxpayer is bailing out the airline industry in less than a year through what they call the Payroll Support Program (PSP):

  • March 2020: US$25 Billion
  • December 2020: US$ 15 Billion
  • March 2021: US$ 14 Billion

A total of $54 BILLION so far flew into the mouth of Americas airlines in a period of 12 months. That’s about $163 for every single person living in the U.S. where the current population is roughly 330 Million.

Yes, keeping employees on payroll will also result in a lot of this money flowing back to the government in the form of payroll and income taxes. It’s never a good thing to have people at home unemployed even if they receive unemployment assistance. But enough is enough, this is the third round of bailouts in 12 months and not a temporary stopgap measure. One has to realize that this permanent propping up of Americas airlines isn’t a luxury the public purse can afford in the long run. And to be frank not even in the short run given the fiscal situation.

In December I asked this exact question: “What happens after these 15 billion [from the December package] run out which won’t take all too long … Probably 2-3 months and then they come knocking again!”

Guess what, that’s exactly what happened.

Maybe it’s time for the industry to shrink and once again consolidate like it did post 9/11. Airlines constantly receive preferential treatment following the “Too Big To Fail” mentality while workers in other industries are fed to the wolves. Yes air transportation is critical infrastructure for the country but if the industry can’t support itself then it has to be limited in network and size. Airline employees receive de facto job security through these bailouts while in the hospitality and manufacturing industry etc mass layoffs are the norm without any significant lobby like the airlines enjoy.

Do we need that many airlines if they require being propped up by the taxpayer through massive bailouts every decade or so? And let’s forget about Covid for a moment, the aviation industry has been in trouble many times before. All while continuously paying airline executives the highest bonuses anywhere in the world and using record profits of previous years for stock buybacks instead of building financial reserves for rainy days.

Conclusion

U.S. Airlines will collectively receive a new $14 Billion aid package from the government that is going directly to payroll support in exchange for bringing back furloughed employees/avoiding furloughs that were looming and to resume certain routes the airlines have suspended.

Carriers are likely receiving these funds within the next few weeks of the bill being enacted. The money will be quickly spent in a matter of another 3-6 months and then what comes next? Meanwhile the American taxpayer was given another $1400 each as a cash handout (at least better than the last check worth $600) after suffering months of economic hardship, an amount that doesn’t even cover one months rent in most urban areas of the country.

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