Airlines Left Out Of Latest Stimulus Plan

Even though a second airline bailout is a bad idea it’s appeared to have political support.

  • It was endorsed by a significant number of both Republicans and Democrats in both the House and the Senate

  • It has the public backing of the President

  • Without it there will be layoffs a month before the election (though far fewer than originally projected, perhaps 40,000 rather than 75,000 or 100,000)

It’s seemed that politically the only thing stopping another payroll support grant program to U.S. airlines – even to U.S. airlines that aren’t going to furlough anyone without it – is the broader gridlock in Congress that has prevented any legislation from passing both the House and the Senate.

However there’s now word that legislation Senate Republicans are unveiling doesn’t include another round of payroll support and also doesn’t include a second $10 billion for airports after the first one made bizarre payments to tiny airports, as much as 50 times their annual operating expenses.

Republicans expect to vote in the Senate on their scaled-down plan this week. Even if this is what passes the Senate, airline money could be added in later as part of reconciliation between the Senate and House bills.

When calculating the cost of ‘jobs saved’ for six months via a ‘clean extension’ of CARES Act payroll support, we were looking at a cost of $333,333 per job since most of the money goes to fund payroll that airlines will have whether a bill passes or not. In other words it funds $200,000+ a year pilots and it funds the salaries of executive management, having taxpayers pick up the tab rather than shareholders and creditors.

Now though against actual announced furloughs we’re looking at a cost of about $625,000 per job saved – and many of those will just mean job losses six months down the road. Ultimately airlines say they are going to be smaller because there’s less demand for air travel, and so they will operate fewer flights. That means they need fewer employees. Paying them to keep those employees on payroll while not actually working does nothing for the economy.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. @ Gary — Unemployment will be under 7% for September and the stock market is at record highs. Nothing else in life matters besides these two things, so why does anyone need a bailout?

  2. 10% of the US economy has been completely gutted. While I agree with no additional bailouts especially since the airlines themselves haven’t done such a bangup job of reducing labor costs and played fast and loose with tens of billions in cash buying back stock – keep in mind the national security implications of this. It’s quite possible a large amount of CRAF wb aircraft are going to the shredder. It is what it is, but with the recovery in total traffic numbers many years out, and int’l travel completely decimated for the next several years, at some point people need to move on. They’ve had six months of regular pay to think up a solution, more than many get with immediate firings.

    I guess in a few years the network carriers long haul flying will mostly be done by China and European carriers, so there’s that to look forward to. Shipping industry 2.0.

  3. but what about $2B for a new FBI building so Trump Int’l doesn’t have competition on a new development across the street?

  4. @ Gene – not a snowballs chance in hell of “Unemployment will be under 7% for September and the stock market is at record highs. Nothing else in life matters besides these two things, so why does anyone need a bailout?”

    Whilst I agree the airlines don’t “need” a bailout… so many regular people do

  5. The stockmarket is artificially inflated by a lot!!. It should be in the high teens. This is how USSR fell into deep socialism with our market crash because our politicians (Lived in ussr in those times) kept all figures falsly high to make people think all was ok when it was not. I’ve seen this before and it is sad and misleading. Never trust the gov ormarket, ever. The us is going to hot economic bottom no matter who is in white house. Your all idiots. Your congress controls your economy and your fema is the group running your country right now, not some president/puppet.

    Plus your airlines are greedy and need to be taught a lesson. No more tax payer bail outs. These companies will never learn if they keep getting bailed. The top 100 executives can cut their pay 50% and still take home 150k to 400k a yr.

    Do not support blm either. They were hijacked by white fascist marxists 12 months ago as so stated on their own webpage. Do not support any company that supports them.

  6. The “bailout” is not for airlines. It is to keep nearly 75,000 aviation professionals employed. The funds go directly to support their payroll, benefits and health insurance. By accepting these funds the airlines have agreed to no stock buybacks and executives have taken pay cuts. A extension is necessary. It will keep thousands of people off of government unemployment programs and will help the economy bounce back faster by supporting even more jobs in the travel and hospitality industry.

  7. The “bailout” is not for airlines. It is to keep nearly 75,000 aviation professionals employed. The funds go directly to support their payroll, benefits and health insurance. By accepting these funds the airlines have agreed to no stock buybacks and executives have taken pay cuts. A extension is necessary. It will keep thousands of people off of government unemployment programs and will help the economy bounce back faster by supporting even more jobs in the travel and hospitality industry.

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