Hope Fades (for Now) for More Stimulus Funds
- Even by the standards of this administration and the 116th Congress, last week was a wild week, one that whipsawed the airline industry and its workers between hope and despair. And the week ended with no further clarity on whether the federal government will step in with more aid to bolster ailing airlines.
Airlines began furloughing more than 30k employees on Oct. 1, when the CARES Act payroll support program expired. But workers could be recalled if more funds were made available. The week started with House Speaker Nancy Pelosi (D-Calif.) and Treasury Secretary Steven Mnuchin negotiating on a coronavirus-relief bill that would have included more than $25b in airline aid. At the same time, bills in both houses of Congress to extend airline industry payroll support through March 2021 were gaining bipartisan support.
But President Trump upset the apple cart early in the week after returning from the hospital, where he was being treated for Covid-19. With a single tweet, he ordered White House negotiators to halt talks on the HEROES Act, the more than $2t bill Pelosi and Mnuchin had been negotiating. Republican senators signaled that even if talks were to continue, there wasn’t enough support in the chamber for a large relief bill.
The next day, Trump said he was open to a standalone airline aid bill. Pelosi and Mnuchin spoke at least twice on moving one of the bills pending in Congress. Senators Roger Wicker (R-Miss.) and Susan Collins (R-Maine) introduced a $28b bill to extend the payroll support program. A similar bill, championed by House Transportation and Infrastructure Chairman Peter DeFazio (D-Ore.), was gaining bipartisan support in the House.
But as the Speaker negotiated with the administration, Republican Senators Mike Lee (Utah) and Pat Toomey (Pa.) questioned the need for more aid. Taxpayers already had spent $25b on airline payroll support, so why should Congress extend it, when restaurants and small businesses were not getting the same favor, they asked. “The excess capacity of the airline sector will not be resolved in the near future, and continuing to force the entire payroll obligation onto the taxpayers is not sustainable,” they said in a statement.
Meanwhile, Trump signaled — again, on Twitter — that the administration now is open to a more comprehensive bill, one that can be signed into law before the Nov. 3 election. The administration, however, sent mixed signals, according to a top Pelosi aide. “The Speaker pointed out that, unfortunately, the White House Communications Director contradicted that assertion during their call,” Drew Hammill, Pelosi’s deputy chief of staff, said. “The Speaker trusts that the [Treasury] Secretary speaks for the president.”
Late in the week, Pelosi changed course and said further aid to airlines would only come through a larger coronavirus-relief bill. “I have been very open to having a standalone bill for the airlines or part of a bigger bill,” Pelosi told reporters. “But there is no standalone bill without a bigger bill.”
The White House has said it will work through the weekend and into next week to negotiate a bill. However, Trump called Pelosi a “nut job” on Friday during an interview with radio host Rush Limbaugh.
But Senate Majority Leader Mitch McConnell (R-Ky.) quickly poured cold water onto those efforts by saying the Senate was unlikely to pass a bill before the election, dashing hopes that any deal reached could be enacted. Remember, the Senate is focused on confirming a Supreme Court justice for the seat vacated by Ruth Bader Ginsburg last month. Also, the Senate is effectively in recess until Oct. 19 as several Republican senators are in quarantine after contracting the coronavirus (thought to have occurred at an event to nominate Amy Coney Barrett to the Supreme Court).
In the meantime, the more time that passes without additional aid, the less likely it is for the 30,000 furloughed airline workers to be recalled. Even Southwest, which famously has never furloughed an employee since its founding, warned that layoffs could begin next year “as a last resort.” CEO Gary Kelly is asking unions to begin talks on concessions to take effect next year. And airlines, freed from CARES Act’s mandates to retain service to all cities, have begun cutting routes.
“We remain hopeful that either the President or Congress will act swiftly to save these jobs,” an Airlines for America spokesman told Airline Weekly. “We need action NOW.”
- With no payroll support extension from Capitol Hill, Southwest CEO Gary Kelly began the uncomfortable process of asking unions for pay concessions. The unions, to put it mildly, weren’t thrilled. SWAPA, which represents pilots, said management has for years ignored its ideas to improve productivity. It also complained that the company wasn’t providing it access to crucial financial data. TWU, Southwest’s largest union (representing flight attendants and ramp workers) said Southwest could save more than $100m annually just by insourcing overnight aircraft cleaning.
Both unions pointed to the airline’s strong cash position, its declining rates of cash burn, and its better position relative to rivals. Kelly says the company is losing “staggering sums of money.” SWAPA says Southwest “has a revenue problem, not a cost problem.” If it tries to furlough pilots, “we will fight to prevent them.”