US airlines to defend billions received in Covid aid

Major US carriers will account on Wednesday for the $54 billion payroll assistance package awarded by the government to the struggling sector during the Covid-19 pandemic.

According to Reuters, the Senate Commerce Committee will hear from the chief executives of American Airlines, Southwest Airlines, and United Airlines, as well as the chief of operations of Delta Air Lines and the head of a large flight attendant union. Others, such as JetBlue Airways and Alaska Air Group, will submit written statements.

The committee chair, Senator Maria Cantwell, urged airline CEOs to participate in the oversight hearing after she sent them letters about reports of staff shortages, significant flight cancelations and delays.

Lawmakers are expected to question executives about how the airlines have used pandemic-related federal rescue funds, as well as about personnel issues, among other matters.

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Since March 2020, Congress has awarded major US airlines a collective total of $54 billion in order to keep thousands of workers on the payroll for 18 months. Of that funding, the airlines must together repay $14 billion, and the US Treasury currently has warrants worth about $200 million, according to a Commerce Committee memo. The Treasury has also provided $25 billion in low-cost loans to airlines.

Airlines that have accepted government aid to fund payrolls until September 30 were barred from taking time off or firing employees, and faced caps on executive pay and a ban on share buybacks and dividends.

According to the trade association and lobbying group Airlines for America, without the help, “airlines would undoubtedly have reduced capacity in proportion to the drop in passenger traffic to avoid a sharp drop in load factors.” The association told the committee that “about 50,000 airline employees have opted for early retirement or voluntary separation.”

US air passenger travel plunged 60% last year, to its lowest level since 1984. Airlines say the coronavirus is causing a drag on demand to sub-2019 levels.

“The Omicron variant has created even more uncertainty, and there is no clear consensus on when corporate and international travel will return,” said Delta’s chief of operations John Laughter.

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