What the new COVID-19 stimulus for airlines means; $ 15 billion in aid

  • The new COVID-19 stimulus package signed by President Donald Trump contains $ 15 billion for airlines.
  • Workers seated from 1 October 2020 will be recalled and will be reimbursed from 1 December 2020.
  • Executive compensation and share buybacks are also limited and air connections will be restored to cities that have lost their airlines.
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President Donald Trump on Sunday signed a long-awaited COVID-19 stimulus package and airlines are among the biggest winners. The U.S. government is making $ 15 billion of the package’s $ 900 billion available to airlines so they can bring back retroactive workers and repair airlines to cities that lost airlines during the pandemic.

The president referred directly to airline workers in his statement in which he announced that the bill would be signed after Congress initially asked to review the grants, specifically to increase direct payments to Americans and reduce foreign aid.

More than 32,000 airline workers have been hampered since March by airlines that find themselves too much, with less than one million daily passengers taking the bulk of the pandemic into the air, with the exception of the holidays.

Read more: Airline executives say it does not matter how well they protect passengers from COVID-19 – travel demand will not bounce back before the pandemic ends

Airlines accepting the assistance will be required to bring back withdrawn workers and also comply with similar terms of the March Coronavirus Assistance, Relief and Economic Security Act regarding remuneration of executives and national air connection levels, among others.

Here’s what airlines can expect in the new stimulus package.

The terms and conditions

Any airline employee who withdrew between October 1, 2020, and the time an agreement between the airline and the U.S. government for payment support is reached will be revoked. On October 1, the employment clauses of the CARES Act expired and caused large-scale plans and reduction of the air route.

If an airline did not participate in the March stimulus but now wants to apply for funds, they must recall the workers who resigned from March 27, 2020.

Airline also cannot fight workers or cut the payment and benefits until March 31, 2021 if they receive assistance. Withheld workers will be reimbursed from 1 December 2020 minus any amount, severance pay or leave they may have received.

The national air link will also be partially restored, as airlines receiving assistance will be required to serve all the cities they served before 1 March 2020. However, the law only specifies cities and not routes, so an airline can operate as little as one weekly flight to a city and be within the law.

The law also restricts the repurchase of shares with airlines that are prohibited from buying bonds in their company, parent company, contractors and the parent companies of contractors, until March 31, 2022. Stock dividends and capital distributions will also be banned by the same date.

Executive compensation is also limited in another detention of the March CARES Act. Employees who have earned more than $ 425,000 in total compensation not determined in 2019 by a collective bargaining agreement will not receive more than their total compensation for 2019 for a period of two years. If they leave the airline, their divorce leave can not exceed more than twice their total compensation for 2019.

Those who earn more than $ 3 million will limit their total compensation to $ 3 million, plus 50% of the amount received over $ 3 million.

Airline contractors, including catering workers and contracted airport staff who are not directly employed by an airline, are also included in the package and receive $ 1 billion in assistance.

How airlines responded

American Airlines, Delta Air Lines and United Airlines welcomed the news and expressed their gratitude to the US Government for approving the legislation. However, executives at United have added a stern warning that expectations are likely to continue after March, as travel demand is not expected to increase by the time the provisions of the law expire.

“The truth is, we just see nothing in the data that shows a big difference in discussions over the next few months,” United CEO Scott Kirby and President Brett Hart wrote in a letter to employees. “Therefore, we expect the recall to be temporary.”

Southwest Airlines celebrated the news as the airline enabled the airline to maintain its 50-year record of no plowing or pay cut for another year. Furlough notices were sent to nearly 7,000 workgroup employees across the airline in December, with the only alternative being paid.

Airlines will now apply for assistance and begin the process of getting their workers back. The law proposes that the treasury to airlines requesting assistance start no later than ten days.

As Kirby and Hart apparently told employees, this cycle could start again in April if no extra help is obtained. And the government’s performance history of passing on additional aid and stimulus packages has not been great, even in the face of thousands of countries in October.

However, the new stimulus comes just weeks after the first COVID-19 vaccine received an emergency permit from the Food and Drug Administration, a critical step for the recovery of the airline industry. If more people return to the air in 2021, the airlines may not be needed.