Flight attendants say government stakes in airlines in exchange for grants could cost jobs
- Congress last week approved $32 billion in grants for airlines to continue paying workers through Sept. 30.
- The U.S. government could take equity stakes or other compensation in exchange for the grants and for loans.
- Airlines are among the hardest-hit industries from the coronavirus as travelers stay home.
Flight attendant unions warned Wednesday that government stakes in airlines in exchange for payroll protections could render the coronavirus aid unattractive and cost thousands of jobs.
Congress last week approved $32 billion in grants for U.S. airlines and contractors like caterers to maintain their payrolls through Sept. 30 while the virus sends demand down at the fastest rate on record. U.S. passenger airlines also won $25 billion in loans.
In exchange for the grants, the U.S. government is authorized to get warrants, stock options, preferred stock or other securities, according to application guidelines the Treasury Department released this week. Airline executives warned they would have to furlough employees if they didn't receive the grants.
But labor unions representing some 94,000 flight attendants, including those at American, United, Spirit and Southwest, told Treasury Secretary Steven Mnuchin in a letter that the equity stake could cost them their jobs. The concern is that airlines would be less likely to accept the grants, depriving the workers of the payroll protection.
"This effectively renders the payroll grants a poison pill that will cost us our jobs and push us onto taxpayer-funded unemployment insurance — the opposite of what this bipartisan agreement intended," the unions said.
Airlines are reviewing the terms of the payroll grants, which carriers and many of their employees urged lawmakers to approve. American Airlines, for example, said it expects to receive $12 billion from the overall aid package for carriers.
Airlines have urged their employees to take unpaid or partially paid leave, a bid to lower costs as travel demand plunges. Delta Air Lines CEO Ed Bastian last week said that around a quarter of the Atlanta-based airlines' 91,000 employees have volunteered for unpaid leave but that the company needs more volunteers.
In addition to unpaid leave and parking hundreds of planes, airline workers are also scheduled for fewer hours, meaning smaller paychecks even though their pay rates won't change if their employers accept the grants.
"Much like an education grant, the value is in the student who contributes their learning to society. The value here is a functioning airline industry, no layoffs, and 2 million people who can still pay taxes because they are employed," said Sara Nelson, president of the Association of Flight Attendants, which represents some 50,000 cabin crew members. "This is what you call a con. Not a grant. The old switcheroo. Here's a $5 bill for free, pay no attention while I pick your pocket."
The Treasury Department did not immediately respond to a request for comment.