July 16, 2020 / 12:51 PM / 21 days ago

Key U.S. lawmakers back unions' call for new airline bailout

WASHINGTON/CHICAGO (Reuters) - Key U.S. House Democrats are backing a push by airline unions for a new round of government bailouts to keep workers employed in the face of tens of thousands of possible layoffs this fall, according to a letter encouraging other colleagues to sign on.

FILE PHOTO: Representative Peter DeFazio (D-OR) speaks during a House Transportation and Infrastructure Aviation Subcommittee hearing on "State of Aviation Safety" in the aftermath of two deadly Boeing 737 MAX crashes since October, in Washington, D.C., U.S., July 17, 2019. REUTERS/Erin Scott

In March, Congress approved $32 billion for the aviation industry to keep workers on payroll through Sept. 30, but as air travel demand remains depressed in the pandemic, airlines have warned of furloughs in October, prompting union calls for a six-month extension of aid.

Airlines for America (A4A), a trade group representing major U.S. airlines, said Thursday it is not actively seeking new government assistance but would accept new bailout funds as long as no new strings were attached.

Under the first package, airlines agreed to limits on share buybacks and executive compensation, and issued warrants on a portion of the funds that the government can exchange for shares.

If Congress enacts labor’s proposal, “we would support our workforce’s decision to pursue a simple and clean extension of the grants as long as no additional or extraneous conditions are required,” an A4A spokeswoman said.

Airlines also agreed not to force any job cuts before October, giving them time to assess the pace of a recovery.

Now over 60,000 airline workers at American Airlines (AAL.O) and United Airlines (UAL.O) alone are facing furlough warnings.

Delta Air Lines (DAL.N) is hoping to avoid furloughs after about 17,000 employees volunteered for buyouts, though Chief Executive Ed Bastian said in a memo on Friday that the airline is still overstaffed in some areas based on its network and demand projections.

The lawmakers’ letter, signed by House of Representatives Committee on Transportation and Infrastructure Chair Peter DeFazio and other Democrats, said “with the current resurgence of COVID-19 in several states across the country and a vaccine for the virus yet to be developed, passenger demand for air travel will not recover before” Sept. 30 and “hundreds of thousands of airline workers may be fired or furloughed starting October 1.”

Airline unions on Wednesday asked lawmakers to sign on to the letter.

After boosting summer flying following some signs of pent-up leisure demand in May and June, some airlines are now scaling back their schedules due to a surge in COVID-19 cases across the country and new quarantines in some states.

Southwest Airlines (LUV.N), which has never had any layoffs, has also warned job losses will be hard to avoid.

Reporting by David Shepardson and Tracy Rucinski; Editing by Chizu Nomiyama, Steve Orlofsky and Jonathan Oatis

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