WASHINGTON/CHICAGO: The US Senate voted late Wednesday 96-0 to give the US aviation industry US$58 bil (RM253 bil) in a coronavirus-rescue package, half in the form of grants to cover some 750,000 employees’ paychecks, in a badly needed lifeline for an industry facing the worst travel downturn in history.
The US$2 tril economic rescue package awards passenger airlines US$25 bil in grants and US$25 bil in loans, cargo carriers another US$8 bil divided between loans and grants, and airport contractors like caterers up to US$3 bil in grants. The US House of Representatives is expected to vote to approve the measure on Friday and President Donald Trump has promised to sign it into law.
Senate Republicans had fought what they called a give away to airlines and initially offered only loans, while airlines had threatened to start laying off tens of thousands within days if they did not get cash.
“This is not a corporate bailout; it’s a rescue package for workers,” said Association of Flight Attendants Sara Nelson, who spearheaded the idea of direct payroll grants for employees ranging from janitorial staff and gate agents to mechanics and pilots.
Reuters reported Chao worked the phones late into the night talking to air carriers about what they needed to ensure they could maintain payrolls, a person briefed on call on Tuesday that lawmakers were nearing agreement on a deal for cash grants for payroll and other employee costs, after airlines made a last-minute effort to convince lawmakers they needed the cash to prevent furloughing tens of thousands of workers.
US airline shares extended a Tuesday rally on hopes for cash relief and under the bill airlines are set to get cash assistance in as little as two weeks.
Republican Senator Pat Toomey, whose party had proposed US$58 bil in loans, said on Wednesday the grants were a key sticking point. He said Democrats insisted “we give away money to airlines and never get it back.”
In a win for labour, companies receiving funds cannot lay off employees before Sept 30 or change collective bargaining agreements.
The bill has restrictions on stock buybacks, dividends and executive compensation, and allows the government to take equity, warrants or other compensation as part of the rescue package, but does not require it.
Airlines would also receive tax relief on fuel purchases and, in a move that may bring down passenger fares, a temporary suspension on ticket taxes.
As the coronavirus has spread around the world, travel demand has plummeted, with airlines drastically reducing flights and warning of more cuts to come.
Airlines keep canceling flights, borrowing money and slashing costs as demand falls. – March 26, 2020, Reuters