(Bloomberg) — President Donald Trump would support narrow legislation to provide more financial aid to airlines, White House Chief of Staff Mark Meadows said Thursday after meeting with industry executives.
Meadows said the industry needs $25 billion, and that up to 50,000 jobs are at risk. Airlines have warned that they plan mass reductions after an existing federal prohibition on job cuts expires at the close of business on Sept. 30.
Extending payroll assistance for airlines has bipartisan support as a way to to avert politically treacherous layoffs a month before the U.S. elections, but so far there’s been no agreement as to how.
“I never thought I’d say $25 billion was a small number, but compared to $1.5 trillion, it’s a rather small amount of additional assistance that could potentially keep 30,000 to 50,000 workers on the payroll,” Meadows said.
“If we’re going to get something separate prior to that deadline, it’s going to have to happen next week,” he said of an airline-only bill. That would ensure it gets to Trump’s desk before layoffs begin on Oct. 1, he said.
House Speaker Nancy Pelosi has opposed “piecemeal” virus relief bills as part of her strategy for Democrats to win agreement on a multitrillion relief measure. She contradicted that stance when she called the House back into session during the August recess to vote on a $25 billion Postal Service bill in the wake of mail delays.
Letter to Leadership
In August, 16 Republican senators signed a letter calling on leadership to add $25 billion in payroll funds in a package of Covid-19 assistance. Some Republicans opposed the measure and it wasn’t part of a stripped-down bill that in any event failed to pass the chamber.
Senator Roy Blunt of Missouri, a member of the Republican leadership team in that chamber, said he favors aid for airlines, which are now operating at 70% capacity. But he said it should be added to a broader stimulus bill.
“If there’s a package, I think that needs to be and should be part of it,” Blunt said Thursday. He added that he doesn’t think airline aid could pass separately. “It needs to be part of the broader package. There are less than 50 days to a presidential election. There’s only so much wind here and we’d better take advantage of any sail we have.”
Back in July, a bipartisan group of House lawmakers called for more airline aid to prevent layoffs.
The prospect of fresh assistance failed to immediately reassure airline investors. All major U.S. carriers in a Standard & Poor’s 500 gauge were down on Thursday, joining a retreat in broader equity markets. The S&P 500 was off 1.2% at 1:48 p.m. in New York.
Carriers have been badly damaged by the coronavirus pandemic, which led many Americans to abandon air travel. After airline passenger counts surged somewhat around the close of summer and the Labor Day holiday, they’ve been declining in recent days.
U.S. airport security portals screened only 30% of the number of airline passengers in the past seven days compared to the total a year ago, according to the Transportation Security Administration. The seven-day average had reached 37% earlier in the month.
American Airlines Group Inc. said in August that it would cut 19,000 employees once federal payroll aid expires, capping a 30% workforce reduction since the coronavirus pandemic torpedoed travel demand. United warned of more than 16,000 cuts, saying it expected no meaningful recovery in demand until a coronavirus treatment or vaccine is widely available.
Delta Air Lines Inc. said this week it would be able to avoid most layoffs until the summer of 2021 at the earliest, although the company remains in talks with its pilots on ways to reduce or eliminate furloughs for almost 2,000.
Delta declined to comment on Thursday, as did American Airlines. United declined to comment and referred questions to Airlines for America, the airline lobby, which didn’t immediately respond to a request for comment.
A pair of aid packages were created earlier this year for the industry. One extended loans to the carriers, which few accepted. The other provided money to pay the salaries of employees in exchange for no layoffs until at least October.
Five major airlines received the lion’s share of the aid, which Treasury Secretary Steven Mnuchin approved in May. American Airlines is the largest recipient, getting $5.8 billion in payroll assistance. The money was a combination of grants and loans.
Still, airlines, including cargo carriers, have so far left $29 billion in federal pandemic relief loans unclaimed as they wait to see whether consumer demand recovers as the economy reopens. Companies including American are in talks for the loans.
Most major carriers have signed “letters of intent” to take the funds, though several have said they do not need it after raising debt in private markets.
(Adds comment from senior Republican senator in eighth and ninth paragraphs.)
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