Airline CEOs and union leaders this week beseeched Congress for an extension of the Payroll Support Program — part of the CARES Act that amounted to a $25 billion industry bailout.
The funding was supposed to help airlines maintain their payrolls until travel demand returned, but that’s not happening fast enough.
Now the industry is warning of a massive wave of layoffs if lawmakers don’t extend funding before Oct. 1.
According to the trade group Airlines for America, passenger volume is off about 65% from a year ago. And airlines are collectively burning through $5 billion each month.
CEO Nick Calio said airlines are asking for a six-month extension “because hopefully by then we will be over the hump. And we will start to have a pickup in travel by next spring.”
The conditions of the previous bailout protected workers until Oct. 1.
Calio warned that up to 100,000 airline employees could soon join the ranks of the unemployed.
And Robert W. Mann, a former airline executive and industry consultant, said a second bailout would help the U.S. economy recover faster when the pandemic wanes.
“If the industry were to fall into disrepair, if it were to fall into destructive restructuring during the pandemic, the question would be, what would you have around to help you around on the other side?” Mann said.
When, exactly, we get to the other side of the pandemic is still murky.
Veronique de Rugy, senior research fellow at George Mason University’s Mercatus Center, said another $25 billion is not going to solve the problem.
“This is just postponing the inevitable,” she said. “As long as the demand doesn’t go back up, this is just basically a Band-Aid patch.”
She said bankruptcy would be the best option. Airlines have shown they can emerge from restructuring healthier. And she said that means troubled airlines don’t pose a major risk to the economy at large.
COVID-19 Economy FAQs
What’s the outlook for vaccine supply?
Chief executives of America’s COVID-19 vaccine makers promised in congressional testimony to deliver the doses promised to the U.S. government by summer. The projections of confidence come after months of supply chain challenges and companies falling short of year-end projections for 2020. What changed? In part, drugmakers that normally compete are now actually helping one another. This has helped solve several supply chain issues, but not all of them.
How has the pandemic changed scientific research?
Over the past year, while some scientists turned their attention to COVID-19 and creating vaccines to fight it, most others had to pause their research — and re-imagine how to do it. Social distancing, limited lab capacity — “It’s less fun, I have to say. Like, for me the big part of the science is discussing the science with other people, getting excited about projects,” said Isabella Rauch, an immunologist at Oregon Health & Science University in Portland. Funding is also a big question for many.
What happened to all of the hazard pay essential workers were getting at the beginning of the pandemic?
Almost a year ago, when the pandemic began, essential workers were hailed as heroes. Back then, many companies gave hazard pay, an extra $2 or so per hour, for coming in to work. That quietly went away for most of them last summer. Without federal action, it’s mostly been up to local governments to create programs and mandates. They’ve helped compensate front-line workers, but they haven’t been perfect. “The solutions are small. They’re piecemeal,” said Molly Kinder at the Brookings Institution’s Metropolitan Policy Program. “You’re seeing these innovative pop-ups because we have failed overall to do something systematically.”
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