American Airlines CEO spoke to a group of pilots a question and answer session posted to the company’s intranet on Monday. In his introductory remarks he talked about the politics of the next coronavirus stimulus bill, which includes more payroll support for U.S. airlines.
The first CARES Act provided $25 billion to airlines on the promise that they wouldn’t furlough workers or stop serving the destinations they fly to (without special permission from the Department of Transportation). American got more than 70% of its 2019 payroll covered, even though they reduced payroll substantially through early retirements, leaves, and slimming down management ranks by 30%.
Southwest and Delta so far have avoided furloughs completely. Really only American and United furloughed any significant number of workers when the CARES Act payroll support restrictions ended October 1. Parker has been the most outspoken airline CEO looking for a second round of funding, with United CEO Scott Kirby appearing publicly as well. (Delta’s CEO has mostly kept quiet but of course will take another $5.4 billion to protect zero jobs, since he hasn’t furloughed anyone.)
Another $25 billion to restore 35,000 jobs is over $700,000 per worker just for six months, which gives away the plot that this is mostly money for airline shareholders. It has to go to payroll, but it would go to cover payroll expenses the airline would have anyway.
And according to Doug Parker it’s only ‘a handful’ of conservative Republicans whom he scoffs at that oppose another bailout,
We have made huge progress in terms of the argument. I mean literally almost no elected official argues that it shouldn’t be done. There are a handful of really fiscal conservative Republicans who just think you know, who just viscerally disagree with the government doing anything that looks like you might be funding a business. I’m talking about a handful. We would get 80 votes in the Senate, we would get 400, 375 votes in the House for a standalone bill to go extend PSP.
Parker is right. At least publicly huge numbers of Members of Congress have said they support this. The same people are calling Congress every day, over and over. And those are the only people Congress hears from. That’s part of the reason why most Members fall for it.
Pat Toomey from Pennsylvania has raised objections. He doesn’t have to worry about running for Senate re-election, since he’s retiring. Mike Lee from Utah has raised objections, but Delta (with its Salt Lake hub) hasn’t made this the same priority that United and American have. Parker is right, only a handful of Republicans have said anything about it – and only a handful.
At the same time the bailout is caught up in the politics of a larger bill. At first Speaker Pelosi seemed to support doing an airline bailout as a standalone bill. But then Treasury Secretary Mnuchin seemed to go for it, and she refused.
Now Senate Republicans are running away from Trump, assuming he’ll lose re-election. If Joe Biden becomes President they’ll need to shift to the role of fiscal conservatives again, which will be difficult to do if they’ve just passed another $2 trillion spending bill. So even if Pelosi and Mnuchin can get a deal done, they have to get it through Republicans in the Senate who prefer a smaller bill, though Trump has threatened to do a deal that gets passed by Senate Democrats and whatever Republican votes he can muster.
Parker is correct that whether his airline gets another bailout depends not on the merits of that bailout (though he’s wrong on the merits) but on the politics of a larger bill right before a Presidential election.
Airline bailouts may be a headline bullet point in the legislation, but it’s just another item alongside $250 million to discourage recidivism by ex-prisoners; $100 million for victims of child abuse programs; $12 billion in wifi hotspots for schools and libraries; $8.5 billion for substance abuse programs; $350 million for AmeriCorps; $175 million for PBS; $100 million to the Veterans Administration for supply chain management; $1.5 million for the Saint Lawrence Seaway Development Corporation – name just a few.