Despite taking CARES Act payroll protection subsidies from the federal government, airlines including Delta, United, and JetBlue have cut worker hours. This means that employees receive less pay, and airlines spend less on payroll, despite requirements not to furlough workers or reduce rates of pay through September 30.
American Airlines CEO Doug Parker said “I was there when we were working on CARES and that wasn’t the intent or meaning of it.” Parker is right, that wasn’t how the CARES Act was supposed to work. Politico has the original language,
provide employees with a guaranteed wage for every workweek that provides each employee continued payments in the amount of 100 percent of the employee’s full wages and for the employee’ total expected hours per workweek i the event that the employee is terminated, furloughed, experiences a reduction in work hours, or otherwie suffers any loss of such wages during such period;
This worker pay protection language was there and it was removed. I had previously suggested it was possible that merely inartful or rushed legislative drafting could have created the loophole that allowed airlines to reduce worker hours, and spend less on wages, even though they took CARES Act payroll subsidies.
I assumed that wasn’t the case – that the sausage got made with the airlines in the room, so it’s not surprising that they managed to get language allowing them to take the money and use some of it to put their shareholders in a better position. And this is the smoking gun. The language didn’t allow them to do this, and they got it changed. They knew exactly what they were doing.
Airline bailouts were sold on the basis that they fully protected workers at the airlines, not just just workers wouldn’t be laid off. Had airlines been transparent about the changes they would make after receiving the money it never would have passed.