You haven’t been buying airline tickets, but the airlines are taking your money anyway. $15 billion in the latest Congressional spending package goes to the airlines, a second bailout. In exchange they have to bring back workers that have been involuntarily furloughed, and can’t furlough again until April 1.
$15 billion, retroactive to December 1, will be provided to cover four months of airline payroll. That’s $375,000 per furloughed worker at an annual run rate of $1.5 million per job, perhaps the most expensive jobs program in history.
- The claim that this is about workers just isn’t true. The actual payroll cost for furloughed employees is under $1 billion, but we’re paying airlines 15 times that.
- The claim that this is about vaccine distribution isn’t true, shipping vaccines is profitable to airlines and internally they say they’re ready to do it on their own. But there’s not enough vaccine to ship now, the binding constraint is supply not cargo capacity. It’s profitable business, but if airlines weren’t ready for it UPS and FedEx say they have the capacity themselves.
- The claim that this is needed for service to small cities isn’t true, routes that have been dropped are losing less than a million dollars per year and airlines like American and United which took billions in CARES Act loans already agreed to continue service to all the cities they fly to if the Department of Transportation tells them to. The government already paid for this, the new deal requires them to do what they could already be required to do.
It’s just a money grab. There aren’t that many customers now, government is giving out a lot more money than flyers are now. This payroll support comes with the ability for Treasury to take additional warrants in the big airlines. So they’re further partially-nationalized. J.P. Morgan Chase expects the airlines to go back to the government asking for a third bailout.
Airlines have no moral fibre… end of story. They take what they can get when they want and have no respect for anyone, least of all their Customers. Anyone with half a brain should stop travelling now and stop paying these leeches more money. As Marie Antoinette famously said, “let them go bust”!
What a joke! I’m so done with the airlines! I’ve cancelled my Admiral’s Club membership and are phasing out my mileage cards on AA. Since almost all of my travels are international I’m sticking with the foreign carriers like BA, Qatar, Emirates, Qantas, etc. I have millions of unused miles and I’ll use those when I have to travel domestically. We all need to hold Congress accountable for this sham of a bail out.
@ All — Vote against incumbents when they are up for primaries. Every one of our Congress people should be voted out. It is disgusting.
@OneXMarine,
That will show them! Those airlines you’ve mentioned are so of the most sleaze ball operations in the entire world. Literally same crap just a different scent.
What does that make total for a year?
@Redman – I disagree, the biggest sleaze ball operations in the world is AA. I’ve flown all of those airlines without status and have been treated much better than flying AA which I am lifetime Platinum on. The F/A’s are pleasant and attentive. AA F/A’s are lazy, and just plain nasty. It needs to fail and be replaced by people that know how to run a business and employees that want to provide service to their customers. My guess is that you’re one of them.
Why do you tie this amount to the number of furloughed workers? What about the number of employees the airlines are still paying when they’re in a negative cash flow position? They have to pay those people too. I think it would be more accurate to compare that number.
The US has the best governance system known to man. But in order for it to work, it takes an educated population and engaged citizens who hold these bastards accountable. A vast majority of people fail on both counts, and we get the government we vote for.
It’s payroll for a work force that isn’t needed. The United States of Socialism. Onward comrades.
@Chris – because they are *paying those people anyway* to maintain their ongoing business, from a ‘jobs program’ perspective the question is how many people are employed who wouldn’t otherwise have been employed? The airlines have given us that answer. That’s the number of people this puts back to work.
And it only sort of puts them back to work, airlines have said they do not need these workers to operate flights based on customer demand. We’re paying some people basically not to move on to some other line of work.
The airlines should have to do what other businesses do. Match the number of employees to the requirements of their business. Why should the taxpayers pay these people to do nothing? I’ve paired my staff back and it’s going to stay that way until business picks up. I’m going to take a $250K haircut or there about this year. The small business man/woman can’t contribute $100K to a congress member to get heard. We can’t afford to hire lobbyist to wine and dine congress members to get the deals the banks and airlines get. I’m with Gary, we can’t continue to pay airline workers who we will probably not need for the next 2 – 10 years to hang around on paid vacation. Let them move onto another profession.
Yes but AA has been so generous only raising mileage redemption from 80k in Business Class to Sydney from the US to 500k one way
You can see they have the heart of their loyal program members in mind
A million miles round trip is a fantastic deal isn’t it?
The screwing continues under the Trump/Parker era
If you think it’s bad now wait until Joe Obama and Spread Eagle Harris get in power. Trump has little if anything to do with how the congress decided to hand out our cash.
Come on folks, lay off the AA criticism. They gifted me 100 miles!
/sarcasm
That’the good news, the bad news you have to fly AA to use them! LOL
Oh look. Another travel blog comment section that’s devolved into a trumper crybabies whine fest
Airlines are critical infrastructure. Travel blogs aren’t. That is why airlines are getting money, and the guy posting this isn’t.
Had the first round of CARES funding not happened both AA and UA would be gone by now. As in ceasing to exist. Which is fine for the demand level now, but look at Australia. Once the government lifted bans, travel increased exponentially from -75% to a similar YOY level of last year within 5-6 weeks. Some businesses can spin up fast like that – airlines cannot.
If government hadn’t shut down borders and didn’t pick winners and losers from a business standpoint I’d lean a little more on the side of the “pure capitalism” view, but they did.
The additional money isn’t about keeping the few furloughed employed – it’s about supporting the underlying business (airlines) that generate 3%-5% of US GDP by themselves let alone all the other businesses they support. Even with the loans the airlines are burning billions of dollars a month just paying their leases and other infrastructure. The amount of cash being burned is eye watering.
@RB – Airlines are critical infrastructure. There will be airlines even if American or United went into Chapter 11. That’s not the same thing as ‘ceasing to exist’. Although even if they went into liquidation, the planes and gates and pilots would still exist.
However United and American both say they’ll exist just fine without this second round of bailouts. So what’s your argument for them?
Murican Kapitalism : Privatised profits, socialised losses. And yet people will vote for those Republican slime.
I support any help businesses (read: employees) which have been affected by government mandates of closure can get. If you’re against airlines getting aid, you’re also against PPP as it’s the same idea yet on a smaller scale.
I didn’t/don’t support blanket $1200/$600 checks to every man, women and child, and don’t support upped unemployment benefits as I personally know business owners who are (were) short staffed because people made more on unemployment.
AA or UA wouldn’t be in Ch 11. Ch 11 requires revenue and a business plan. They’d be liquidated (*poof*). Like I said above, that is fine for the demand level now as they are unneeded but look what happened when Australia opened up…demand returned to normal in very quick fashion. Personally I think it’s garbage that this has been brought on by government mandates and not a bad business model, so support their continued support just like I’m for PPP monies.
@RB – My objection is that the airline personnel got 26 weeks of pay while PPP was for 4 weeks. Now they are getting 16/17 weeks and I haven’t heard what small business is getting, if it’s another 4 or something less. I can’t imagine more. My companies have been hit hard by the shut downs and border crossings closure and yet we still give service and get product out the door. The airline personnel act like they are so superior to other members of society and they “deserve” more money because “we are here for your safety.” Service was poor before the virus and now it’s non-existent. The congress should not be picking winners and losers. What one group gets everyone should get.