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U.S. airlines make urgent call for new bailout ahead of October 1 job cuts

David Shepardson and Tracy Rucinski
·3 mins read
FILE PHOTO: People walk past an American Airlines logo at John F. Kennedy (JFK) airport in in New York

U.S. airlines make urgent call for new bailout ahead of October 1 job cuts

FILE PHOTO: People walk past an American Airlines logo at John F. Kennedy (JFK) airport in in New York

By David Shepardson and Tracy Rucinski

WASHINGTON/CHICAGO (Reuters) - Major U.S. airlines launched a last-ditch bid to persuade Congress to grant them a new $25 billion bailout to help avert tens of thousands of employee furloughs set to begin Oct. 1.

The chief executives of American Airlines <AAL.O>, United Airlines <UAL.O> and JetBlue Airways <JBLU.O> and major aviation unions held a news conference on Capitol Hill on Tuesday afternoon calling for a six-month extension of a payroll support program that consisted primarily of grants in exchange for keeping workers on the payroll.

"We're not going to give up," American Airlines CEO Doug Parker said, affirming that the airline would furlough some 19,000 on Oct. 1 without fresh aid.

He reiterated, however, that the company itself is not at risk without assistance. "American Airlines is going to be fine," Parker said.

On Monday, two key Republican senators introduced legislation that would authorize another $25.5 billion in payroll assistance for passenger airlines, but congressional aides said it was unlikely to win passage given aid requests from many other struggling industries.

And with lawmakers shifting their focus to a looming battle over the vacant Supreme Court seat following the death of Justice Ruth Bader Ginsburg, the likelihood of Congress passing a broad coronavirus relief package before Oct. 1 is slim.

However, the White House could find a way to provide some assistance to airlines without congressional action.

The first $25 billion in payroll assistance to airlines was included under the $2.3 trillion CARES Act aid package in March, which also set aside another $25 billion in government loans for airlines.

American was the first U.S. airline to say it would tap its portion of the loans, something United Airlines CEO Scott Kirby said on Tuesday his company would also do.

American plans to halt flights to 15 smaller airports starting Oct. 1 without new assistance, while Kirby said United does not plan any immediate flight cuts.

The loans carry restrictions on share buybacks and executive compensation.

Delta Air Lines <DAL.N> and Southwest Airlines <LUV.N>, which have stronger balance sheets than their peers, have said they will not use the loans, while JetBlue Airways CEO Robin Hayes said on Tuesday a decision will be made in the near future.

International President of Flight Attendants-CWA President Sara Nelson said the funding was critical. "This is a jobs program," Nelson said, recounting how numerous airline workers are on the brink of losing their jobs.

Representative Jim Himes, a Democrat, proposed at a hearing Tuesday that taxpayers should be fairly compensated for the use of government funds to support private business.

On a call with airline and union leaders, Himes said the industry message feels like a "hostage situation" for workers, describing the sentiment as "Give me the money for free or we (won't) take it and we will fire people.’”

(Reporting by David Shepardson and Tracy Rucinski; Editing by Cynthia Osterman and Aurora Ellis)