Congressional Democrats Expected To Back Third Airline Bailout

Get ready to have your pockets picked, again.

Democratic congressional leaders are expected to back a third airline bailout of $14 billion for airlines and $1 billion for contractors. This would require airlines not to furlough workers for six months (past the current March 31 no furlough agreement).

Democratic leaders in Congress are likely to back $14 billion to extend the airline payroll support program for six months which would keep nearly 30,000 airline workers after the existing program expires on March 30 as well as additional funding for the sector, congressional aides and industry officials say.

Sara Nelson, president of the Association of Flight Attendants-CWA representing workers at 17 airlines, confirmed at a House Transportation and Infrastructure hearing on Thursday that $14 billion was being discussed for airlines and $1 billion for contractors.

Congress agreed to a second airline bailout in late December and mere days later airlines began their push for the third one, a prospect that investors have been eagerly anticipating.

  • Payroll for airline workers who were furloughed in the fall runs approximately $250 million per month. Fewer workers are at risk of furlough this spring, but let’s just use the $250 million figure. $1.5 billion to cover payroll for all workers at potential risk of furlough for six months.

  • Airlines are furloughing workers because they’re not needed to fly based on current levels of travel. This is a full pay unemployment program. (Most furloughed workers won’t actually work during the period they’re paid as a result of the second payroll support bailout. The third payroll bailout is nearly 10x overfunded to cover the actual full cost of paying furloughed workers.

  • In other words airlines pocket the other $12.5 billion. They ‘have to spend it on payroll’ but they spend it on payroll costs they’d otherwise incur, for employees they need to fly and meet customer demand.

Delta hasn’t furloughed a single worker and got a second payroll bailout. Southwest hasn’t furloughed any workers during the pandemic, and after the second payroll bailout pledged not to furlough any workers at all in 2021. But they’d still get billions not to furlough workers for part of 2021.

You haven’t been buying their tickets but they’ll take your money anyway. Airlines will do anything to take billions of dollars away from taxpayers. They’ll even tell falsehoods about vaccine distribution. Don’t believe any of it.

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. It’s beyond obscene, but it’s also inexplicable.

    I just want to hear Bastian talk about the ME3 and their subsidies.

  2. It’s abhorrent how you’re dividing working people and pitting them against each other. Wall Street gets a bailout, nothing. Money straight to workers to keep them on their healthcare and you have a problem with that? Evident you’ve never worked blue collar and worried about these problems.

  3. This will be a poster issue in the 2022 mid-terms.

    There could be no worse market distortion.

    Given that we have an administration that thinks that bowing to teachers’ unions instead of doing a Reagan on teachers and protecting Americans, the only question is how long this goes on.

    The Dems are cutting their own necks. The vast majority of Americans are beyond outraged at playing AAL and UAL’s games at the expense of tens of billions of dollars of taxpayer money while small businesses shut down.

  4. The airline bailouts remain stupid. But they are a tiny, tiny fraction of the money Congress is planning on wasting with it’s “Covid response.” At least the readers of your blog — frequent flyers — may get a tiny benefit from more aviation spending. Most of the money Congress and the President will spend will benefit no one, and may actually be harmful to society. The best thing gov’t could do at this point is, somewhat astonishingly, absolutely nothing but we all know that won’t, ahem, “fly.”

  5. You guys haven’t figured this out yet? We run trillion dollar deficits (and sometimes multi-trillion). None of this money is coming out of anyone’s hands. It’s being “created” then dispersed. Think of it as a credit card with no limit and an ability to pay with another credit card again, with no limit.

    When the pols discovered you could buy votes by printing money, that wasn’t theirs, or anyone’s, it became infinitely easier to hand out stuff. $50k in college reimbursement? $15k for first time home buyers? Low/no cost health insurance? These are all things on the docket if you haven’t been paying attention. But they don’t really cost anything, because tax dollars aren’t going to pay for them. Money from heaven is. You think I’m joking but we’ve been spending far more than we take in for decades save for the Clinton years and everything is still fine.

    Of course, one day the world may wake up and the US dollar tanks, but until China can counter it, it will be the world’s currency. Mostly because everyone else is doing the same thing.

    Inflation FTW!

  6. Behold, power of central planning.

    Politicians sink the ship, but brag that everyone now has equal access to life-rafts.

  7. Im not sure how we’re getting our pockets picked when my airline calls are all up 100% over the past 8 months 😀

  8. America is so screwd. As insane as Trump was, at least the economy was strong.
    China is absolutely going to eat America’s lunch in the coming generation. Don’t fall for the bullshit propoganda (“there’s nothing we can’t do together bla bla bla”) that’s like taken out of some show.

    Unfortunately, reactionism is in full control now, and after Trump’s reign being so crazy and full of turmoil, now the far left is dictating the tone of government (regardless of this specific airline bailout decision, which is indeed a special kind of BS on all sides of politics).

    Good luck America.

  9. @free_money — Indeed, it’s the “money-for-nothing” mentality that prevails. Even though we are the richest country in human history, we find it impossible to live within our means. Almost no one would be willing to raise their own taxes for any of this. When this profligate monetary policy comes back to bite us, I guess we’ll owe an apology to those we harm.

  10. How arrogant of Congress to say that this generation, this industry or that industry , is SO IMPORTANT that we need to mortgage our nation’s future and our children’s and grandchildren’s future to hand out free money to people and companies that do not need it and do not deserve it?

    What’s a trillion here or a trillion there between friends, right? This Congress will never have to deal with it. Do these people have any idea how much a trillion is?

  11. I’m tired of my tax dollars being wasted by helping the airlines out. These are private corporations who should be able to run a business on their own. If they were better managed not so too heavy, maybe they could survive. What was American thinking when they built such an over the top headquarters??? They could have so much money on hand had they not be so ostentatious.

  12. Corporate welfare and welfare for the rich is business as usual in America. It’s the natural consequence of the political dynamics in the US with the corporate-apologist courts giving ever more freedom for the formalized corruption that gives a free hand to the wealthy corporations and wealthy individuals to play games that conquer the American political processes even at the expense of the general public which lacks the the financial means and related opportunity (afforded by financial freedom) to influence the process except at the margins in the form of voting in elections.

  13. Chopsticks,

    It’s fiscal policy, not monetary policy. 😉

    There is profligate fiscal policy and profligate monetary policy, but a pandemic is a better time for the Congress and Executive to be engaged in a profligate fiscal policy than the pre-pandemic years of the Trump-Pence Admin that was the latest example of a badly profligate fiscal policy.

    The 2017 Trump tax plan remains far more fiscally irresponsible than yet another bad airline bailout.

    Want to know what’s going to really nail the long-term prospects for the US? Not this airline bailout, but when this massive financial markets’ bubble really pops and pops completely. Credible monetary policy leverage in the US will already have been maxed out and US fiscal policy leverage will have nothing left to go on than borrowing money with the hope that real long term interest rates for US borrowing hover around or below zero long term.

  14. Tim Dunn,

    Let’s not be dunces.

    American teachers in 2021 aren’t as susceptible to US Presidential power as the ATC back in the 1980s, nor should teachers/teachers unions be as susceptible to US Presidential power.

    Safer and healthier school environments for teachers makes for safer and healthier communities. That requires money, and the striking/reluctant-to-return teachers know it. Pony up for safer, healthier schools and the country will be better for it sooner than otherwise.

  15. Oh p*ss off Gary.
    This is money for airline employees, not for the airlines. It goes straight into the pockets of tens of thousands of Americans who would otherwise be on the street looking for nonexistent jobs.

    Get a f*cking grip.

  16. @rjb – did you make that same argument with the Trump tax cut that was a 1.5T giveaway to the super rich and corporations, that to no surprise, ended up being a total giveaway that didn’t magically pay for itself?

  17. Why all the drama? just nationalize the whole sorry lot of them to one government entity and rename aptly rename it Amtrak Sky Link.
    Oh yes for all of those of you who will not get paid to sit on your duffs at full pay and not even call into work please feel deep sorrow for these poor overworked special class of transpiration workers that somehow deserve to continue on the government dole. Looks like no end to it.

  18. @ UA-NYC

    The reason the tax cut went mostly to “the rich” is because the bottom half don’t pay much if any federal tax. At one point I thought it was impossible to get a tax cut if you pay $0 in taxes but I was wrong – the “stimulus” proposal now has $300/month credits for each child for most families in America despite federal taxes paid.

    The infuriating thing about all this stimulus money is it isn’t going to the businesses that need it because they are still (mandated) closed or restricted. It’s a farce.

  19. Nationalized carriers linked into one behemoth would leave consumers with a monopoly entity that is even worse than the government-backed oligopoly players we have living off governmental waivers and waivers in one way or the other.

    If the government wants to keep bailing out airlines, the government should do so with an offer to purchase newly-issued airline convertible bonds on terms highly favorable to the governmental buyer that can leverage the government’s access to cheaper credit than available to the airlines and give the taxpayers an upside to airline industry recovery.

  20. BB
    Even if what you said is reality…..and it is not…airlines led by American are just stashing millions into executive slush funds or stock gimmicks they will reap the benefits when they bail or are removed, these tax payer rip offs still beg the question of why this “special” group should get these handouts when all the other millions out of work are subjected to the unemployment system. Does this not elevate the airline worker crew into a “provided” category like those upper income high paying taxpayers the liberal crew rails against?

  21. Politicians of both parties have has always been free with taxpayer’s money – it’s one of the major reasons they appeal to a certain segment of the voters. Democrats are pro-union, so naturally to keep their brethren happy there will be more airline bailouts.

    The multiple bailouts for the airline industry can not be justified but that’s beside the point. The unions are politically connected and very savvy. Other travel segments such as hotels, restaurants, etc. simply don’t have the clout of the airline lobbying arm. Since it is merely another trillion or so to add to the deficit, no one minds. People have said for years the deficit is out of control, yet we’re still in a low inflationary phase with low interest rates and there seems to be little to no pain of more deficits. Let the good times roll. If there is a price to be paid it is in the distant future and will be someone else’s problem.

    True that the recent tax cuts also contributed to the deficits, but in that case at least it was returning money to the people who were actually paying the taxes. But Democrats are more about redistributing money from the productive classes to the non productive classes. As they say, elections have consequences, and those who voted Democratic are queued up for their rewards.

  22. No more airline bailout please! I work for united ailines and they are being unfair for all of us that accepted the recall! We do all regets that we came back! Please do not bail the airlines! They are the most corrupt people! There are so many employees accepted the VSL (Voluntary Separation Leave) and they will just keep the goverments money for themselves and not for the employees! All of us that accepted the reacall are begging you to not bail the airlines! Think about it! They are even robbing us and not making anything! We are not going to survive with this! Help us! And do not give more money to the airlines! They are corrupt!

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