Coronavirus

As Airlines Begin Layoffs, Nancy Pelosi Promises Bailout

House Democrats are working to extend another round of emergency aid to airlines in a stand-alone bill after the passage of a larger coronavirus relief package stalled in the Senate.

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Two major American airlines are threatening to cut roughly 32,000 jobs in the coming weeks unless Congress delivers another taxpayer-funded bailout—and Speaker of the House Nancy Pelosi (D-Calif.) is preparing to clear the runway.

In a statement on Friday, Pelosi called on airlines to delay planned layoffs that were scheduled to begin after a previous round of federal support expired. Pelosi said House Democrats were working to extend another round of emergency aid to airlines in a stand-alone bill after the passage of a larger coronavirus relief package stalled in the Senate.

American Airlines and United Airlines announced plans this week to slash 19,000 and 13,000 jobs, respectively, after the expiration of a $32 billion aid package passed in March. That bailout, part of the $3 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act, allowed airlines to tap into federal assistance as long as they kept at least 90 percent of their staff on payroll through the end of September.

With that deadline now passed and air travel still suffering due to the COVID-19 pandemic—passenger air traffic is running at roughly 30 percent of 2019 levels, Reuters reported on Friday—airlines are expected to cut unnecessary staff. But those layoffs create a political problem for congressional leaders and the Trump administration, neither of which want to see unemployment climb again in advance of the election. The airlines are seeking another $25 billion.

"An airline bailout is bad policy and bad use of taxpayers' money," says Iain Murray, vice president of the Competitive Enterprise Institute, a free market think tank.

Congress is trying to protect what Murray calls "legacy carriers," whose business models are anchored in business travel that no longer makes sense. A bailout, he says, obscures the simple truth that "air travel is not going to 'return to normal' anytime soon."

Despite that, even Republicans are trying to present the possible bailout as a fiscally prudent step. As Reason's Christian Britschgi highlighted last month, White House Chief of Staff Mark Meadows, the former chairman of the supposedly fiscally conservative House Freedom Caucus, has been pushing for more aid to airlines. Sen. John Cornyn (R–Texas) has also voiced support for an airline bailout bill—perhaps because he's running for reelection next month and represents a state where both American Airlines and Southwest Airlines are based.

But even if a bailout did make some degree of sense, the amount of money Congress is considering handing over to America's airline industry is far more than what should be needed to keep workers on the payroll.

Do the math, says Veronique de Rugy, an economist at George Mason University and Reason contributor. Even if the 32,000 workers getting furloughed each earned $100,000 annually, supporting their wages for six months would require about $1.75 billion—far less than the $25 billion bailout Congress is considering.

"In other words, the airlines are demanding more than 10 times more than is necessary to support 35,000 employees," writes de Rugy in an analysis published by the Mercatus Center, a right-of-center think tank.  "These circumstances suggest that the proposed bailout would benefit largely shareholders and creditors, despite its ostensible purpose to help workers."

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  1. How about we send the bill to every state that refuses to open their economy and has made travel miserable if not next to impossible?

    1. Cuomo assures us he’s not responsible and the feds must pay for it all.

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  2. Do the math, says Veronique de Rugy, an economist at George Mason University and Reason contributor. Even if the 32,000 workers getting furloughed each earned $100,000 annually, supporting their wages for six months would require about $1.75 billion—far less than the $25 billion bailout Congress is considering.

    The difference between the $25 B that the democrats wants to give the anti-American Airlines and the $1.75 billion needed to continue the 32,000 employees that will be laid off is $23.25 billion! Now that $23.25 billion that the democrats want to give the airline must be a payment for the allowing BLM pinns to be worn by the flight crew while on the job but will not allow any thing that is in any way supporting Trump.u

  3. Planes aren’t free; those loan payments are still due. Hey, fuel isn’t free either, and if the airlines stop buying it now, those oil refinery employees will be out of work too. Oil refinery equipment isn’t free either. Airline food — bad as it is, it isn’t free either.

    All these things cost money.

      1. And you need to think, read between the lines, and get a warranty replacement on your sense of humor.

    1. And I’m in the business of making widgets that nobody wants and “All these things cost money”… How about I just steal some money with gov-guns?

    2. “All these things cost money.”

      As does buying votes, but that hag has a ready stash right at hand; your money.

  4. What this should tell everyone is that democrats are out of ideas. They just keep up the pump hoping things will get better and push the problem down the road. Considering most democrat leaders are in their 80s that means they really don’t give a shit.

    1. Dems and Repubs have both been in favor of corporate bailouts, both this crisis and in 2008-9. Neither party can resist the corporate pork in times of “crisis.” For some reason, it’s government’s role to give taxpayer money to unprofitable private companies.

  5. The unemployment package will provide for the employees.
    This bailout must be for the companies themselves.
    Besides, Nancy is only using this as a vehicle to bail out her dem state buddies.
    #defundthebailouts

  6. You know who needs a bailout? Charles Koch, the billionaire who funds Reason.com.

    Unlike Jeff Bezos and Elon Musk, who lucked out with businesses that can thrive in a high-tariff / low-immigration economy, Mr. Koch’s livelihood depends on a constant influx of highly-skilled labor. Especially from Mexico. Which Orange Hitler has denied him through draconian anti-immigrant policies.

    #HowLongMustCharlesKochSuffer?

  7. It would be better to put that money into unemployment benefits for all workers.

  8. Maybe the airlines can keep flying on a full schedule, but with planes filled with those cardboard cutouts we now see in sports stadiums. That would sure justify a $25 billion handout.

    Where would you like to send your facsimile?

  9. Well the cat is out of the bag, a lot of that airplane travel at least for business purposes wasn’t really necessary in the first place. Hello Zoom! And you’re not going to get a lot of leisure travel with 10% unemployment and tons of people anxious about their jobs. Ken is right about one thing – this coronavirus recession really is a sort of ‘time machine’ that sped up innovations, in this case, the adoption of online conferences and meetings to replace the in-person versions. So the airlines will just have to adapt to that. They were going to have to adapt to that reality at some point anyway.

    1. Nice take.

    2. Bingo. Absolutely pointless to artificially prop up largely obsolete industries, and create zombie companies. Society needs to adapt, it’s not government’s role to bail out these companies. Of travel is down 70%, let them cut service 70%. It’s not rocket science. Did the Feds bail out the horse and buggy industry when cars took off?

      1. “…Did the Feds bail out the horse and buggy industry when cars took off?”

        Not arguing for the bailouts (suck it up airlines), but the governments didn’t, by mandate, knee-cap those industries. They were simply out-competed and out-progressed.

  10. And to think; out here in the country we’re running a shortage of crop plane’s and pilots…

    It has nothing to do with job growth and everything to spoiled brats who have grown immune to gov-gun theft wanting paid for absolutely nothing.

  11. Giving the airlines another bailout? Will they be refunding customers for services they canceled this time around?

  12. I just took a flight on AA today. The plane was completely full. Maybe there are fewer flights, but both airports seemed busy enough. Just by coincidence, Steve Scalice was sitting across the aisle from me. He watched 3 episodes of Celebrity House Hunters on his iPad, just in case anyone was wondering.

  13. The problem for the airlines is not the planes aren’t full it is who is flying. The cattle car class that most of us take for our trips do not pay for the flights it is the business and first class seats and those have emptied out now that companies realize they can use remote conferencing just as easily as sending someone to do an in person meeting and companies tightening their belts are not making big purchases so the sales reps are no longer needed. This will mean the economy class tickets will start rising in price if they haven’t already to make up for the loss of these business class tickets.

  14. Everyone thought the airlines were finished after 9-11.
    This too, shall pass.

    1. Yeah.
      Zoom, et al, ain’t face-to-face, and that was never an ‘optional’ sales expense.
      Deals in the millions won’t get done over the phone or looking at some distorted mug on your computer as soon as flying is seriously functioning again.

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  17. I, for one, am shocked. Where’s the Disney bailout? They’re laying off 28,000 people which should justify $20 billion at least.

  18. — Nancy, you parasite on the body politic.
    — Laughter and Pelosi’s $140 million.

  19. There’s no point in the government bailing out a company dying from covid restrictions which the government is not willing to ease. Why bail out airlines if states make tourism unenjoyable to impossible? I’m not flying to New York for their fabulously limited nightlife and occasional riots. And most people are wary for traveling inside a tube for hours.

    This is a point the republicans has to raise in the senate. There’s no stopping the bailout, it’s coming one way or another. These industries pump money into states, and that goes beyond tourism. Indeed, it makes little sense to say “adapt to the market or die” when the market has been restrained by government orders.

    If the government is preventing businesses from operating as usual out of some public safety concerns that was not created by businesses, then they have SOME compelling case for bailouts. The solution is to END the lockdown. Nothing can be achieved if states continue to lockdown for months and weeks at their whim.

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