House Committee Chair Urges Cargo Carriers To Return $630M In PSP Aid
WASHINGTON—The chairman of the U.S. House subcommittee overseeing the U.S. government’s response to the COVID-19 pandemic called on four cargo carriers to repay more than $600 million in federal payroll support, arguing the funds were not needed in light of the cargo sector’s resiliency during the crisis.
The four carriers—AmeriJet International, Atlas Air, Kalitta Air and Western Global Airlines—received a total of $630 million under the CARES Act Payroll Support Program (PSP), which allotted $4 billion total in worker subsidies for cargo airlines, in addition to $25 billion for passenger carriers and $3 billion for contractors.
However, given the strong financial performance of the four carriers in 2020, Rep. Jim Clyburn (R-South Carolina), chairman of the House Select Subcommittee on the Coronavirus Crisis, said they should either return the money to the U.S. Treasury Department or demonstrate that the funds were actually needed to keep workers on payroll, as Congress originally intended in crafting the CARES Act.
In separate letters sent Oct. 20, Clyburn wrote that each of the four carriers “appears to have had financial success” during the pandemic, adding: “If your company did not need the PSP funds to keep workers on the payroll, failing to return the funds to the Treasury would be inconsistent with Congress’s clear intent.”
Unlike passenger travel, the cargo sector has been a source of strength during the COVID-19 pandemic, with global air freight demand down just 13% as of August, compared to a 75% contraction in revenue-passenger-kilometers, according to IATA. Cargo operators have also seen their financial results boosted by a spike in shipping rates attributable to lack of passenger aircraft belly capacity, with import air freight prices 56% higher in August from the prior year, according to the Bureau of Transportation Statistics.
New York-based Atlas received $406 million in total PSP funds, more than any other cargo carrier, despite the fact that its 2020 second-quarter earnings ballooned by approximately 300% from a year earlier. The company forecasts its full-year adjusted net income will more than double from 2019, while its stock price has more than doubled since March.
“It is troubling that Atlas Air is receiving over $161 million in taxpayer funds intended to cover the wages and benefits of its workers while simultaneously experiencing increased demand for its services,” Clyburn wrote. “The company’s financial success suggests that Atlas Air did not need taxpayer funds to help retain its workers.”
A spokeswoman for Atlas confirmed the company has received the letter and plans to respond soon.
Kalitta Air received $161 million in PSP funds, the second most of the four carriers. Clyburn asserted the airline has “benefited wildly from increased demand” during the pandemic, observing that it recently landed a spate of lucrative, new contracts with the U.S. Postal Service, U.S. Transportation Command and Japan Airlines.
AmeriJet and WGA, meanwhile, received $30 million and $34 million in PSP funds, respectively. Representatives for Kalitta, AmeriJet and WGA did not return requests for comment.