WASHINGTON—In a last-ditch effort to prevent mass airline employee furloughs beginning Oct. 1., two U.S. Senate Republicans introduced a bill to extend the Payroll Support Program (PSP) through March 31, 2021.
Originally enacted as part of the CARES Act coronavirus relief bill on March 31, the PSP funded the bulk of U.S. airline labor costs during the 2020 second and third-quarters, under the condition that airlines avoid involuntary furloughs through Sept. 30. But with the original deadline fast approaching, demand remains stuck around 30% of last year’s level, leading carriers to warn of tens of thousands of potential furloughs beginning Oct. 1.
The Air Carrier Worker Support Extension Act, introduced Sept. 21 by a pair of Senate Republicans, seeks to bypass congressional gridlock surrounding a larger coronavirus relief package by making airline industry aid into a standalone bill. The bill’s sponsors are senators Roger Wicker (R-Mississippi) and Susan Collins (R-Maine), chairs of the Commerce, Science and Transportation Committee and Appropriations Subcommittee on Transportation, Housing and Urban Development, respectively.
With about $28 billion earmarked for passenger airlines, cargo airlines and contractors, the proposed program is nearly identical to its previous iteration. Roughly $11 billion of the total funding amount will be new appropriations, while the remaining $17.4 billion will be repurposed from unspent CARES Act secured loans, originally provided as part of a $25 billion lending facility that accompanied the PSP. Because the secured loans proved to be unpopular with carriers, however, an additional round was left out of the latest bill.
As in the original PSP, the extension would require carriers to continue service to most points in their pre-pandemic networks. While this requirement succeeded in boosting connectivity across the U.S. during the spring and summer, it also forced airlines to operate near-empty flights on many routes. Some carriers, like American Airlines, have already announced plans to eliminate select routes beginning Oct. 1—plans that will likely have to be shelved should Congress deliver another round of airline relief.
Additionally, the proposed extension would renew a ban on stock buybacks and dividends, as well as limits on executive pay, through March 31, 2021. It would also require airlines to issue warrants to the U.S. Treasury Department as a form of taxpayer protection. The original PSP required large carriers to repay around 30% of their total payroll funds, with warrants issued to the Treasury equaling one tenth of that amount.
“The CARES Act successfully saved thousands of jobs that support the airline industry and provided these businesses with some breathing space after the drastic drop in air travel caused by the COVID-19 pandemic,” Sen. Wicker said in a statement. “However, the market has not turned around as much as we had hoped, and additional relief is needed to prevent more than 60,000 aviation sector employees from losing their jobs beginning October 1.”
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