10 airlines agree to terms for federal grants to save jobs

Assistance aimed at keeping airline workers employed through Sept. 30

A man waits at a terminal at Ronald Reagan Washington National Airport on March 17. Jet Blue is one of the airlines that agreed to participate in the new $25 billion grant program. (Caroline Brehman/CQ Roll Call)
A man waits at a terminal at Ronald Reagan Washington National Airport on March 17. Jet Blue is one of the airlines that agreed to participate in the new $25 billion grant program. (Caroline Brehman/CQ Roll Call)
Posted April 14, 2020 at 8:06pm

Ten major U.S. airlines have reached agreement with the Treasury Department on federal grants aimed at keeping airline workers on the job through Sept. 30, officials announced Tuesday.

Alaska, Allegiant, American, Delta, Frontier, Hawaiian, JetBlue, United, SkyWest and Southwest indicated they would participate in the $25 billion grant program in the $2 trillion coronavirus spending bill approved last month. 

Initial drafts of the spending bill included loans but not grants. Airlines, labor unions and Democrats fought to get grants in the bill, arguing they’d provide an immediate injection of dollars to protect airline workers. 

Under the terms of the grants, airlines can ask for the equivalent of their payroll between April 1 and Sept. 30 of last year, with the companies that receive grants agreeing not to furlough or cut pay or benefits until Oct. 1. An estimated 750,000 U.S. workers are employed by the airlines.

The coronavirus spending bill included an additional $25 billion in loans for airlines, which have been clobbered by the pandemic. Just 90,510 people passed through TSA checkpoints on Sunday, down from 2.4 million on the same day last year.

In an agreement announcement, Treasury Secretary Steven Mnuchin said the department continues to discuss the potential participation of other airlines, and is working to review and approve applications for smaller passenger carriers “as quickly as possible.” The department will provide guidance for cargo carriers and contractors “soon,” he said.

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 ’Poison pill‘

Unions fought for the $25 billion in grants but expressed concern about a last-minute provision tucked in the bill that would allow the government to take equity or require grant money to be paid back, arguing that such a provision would amount to a “poison pill” that would discourage airlines from taking the money and effectively turn the grant into a loan.

While the Treasury did not confirm the final details of the agreement in its announcement or in email requests Tuesday, Reuters last weekend reported that the department would require airlines to pay back 30 percent of the grants, as well as demand warrants equal to 10 percent of the amount.

Association of Flight Attendants-CWA International President Sara Nelson criticized Mnuchin’s decision to require part of the grant money be paid back, saying the secretary “decided to play games with this aid, rather than deliver it in the way Congress intended in the bipartisan deal.”

Despite that, she called the agreement "an unprecedented accomplishment.” She said the payroll grants would provide “stability and hope to millions of aviation workers” and said she hoped a similar model would be used for other workers who have lost jobs because of the pandemic.

Joe DePete, president of the Air Lines Pilots Association International, said the grants would help save jobs and stabilize the aviation industry, but added, “unfortunately, Treasury is undermining the intent of the CARES Act by treating a portion of the grants designed to protect jobs not as grants, but as loans, which will make it harder to stop layoffs and slow the recovery.” 

He urged Congress to overturn the provision that allowed the Treasury Department to ask for part of the grant money to be paid back.

Oregon Rep. Peter A. DeFazio, chairman of the House Transportation and Infrastructure Committee, acknowledged the grant process “was neither easy nor perfect,” but expressed relief that the grants would keep “hundreds of thousands of airline employees — from flight crews to baggage handlers — on the payroll during this extremely tumultuous period for the U.S. economy.”

“By ensuring federal relief flows first to employee payroll and benefits, we can protect taxpayers and keep millions of U.S. workers on the job rolls and out of unemployment lines while helping air carriers of all sizes, including regional airlines on which small communities depend, survive the most serious and profound crisis in the history of aviation,” he said.