What’s The Latest – One Week Until Airline CARES Funding Runs Out

The clock is ticking for airlines and their workers with CARES Act funding set to expire on October 1. To date, US taxpayers have provided US-domiciled airlines with over US$25 billion in funding to meet payroll expenses. That has safeguarded the jobs of tens of thousands of airline workers. However, with funding due to end, there are predictions of mass layoffs in October.

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The US airline industry risks falling off a cliff once the current CARES Act funding ends. Photo: Chicago O’Hare Airport

There’s good news and some not so good news

This week, airline CEOS have fought hard for further funding. They want a new $25 billion funding package to keep their workers in jobs until March. It comes as the Trump administration throws its support behind legislation introduced by a Republican senator to extend funding by another six months.

“I spent two days last week meeting with White House and Congressional leaders,” said Gary Kelly today.

“I have some good news and not so good news. Both sides of the political divide recognize that airlines are a critical part of the economy. There is very strong support from Congress and within the White House for extending the payroll support program. I feel more optimistic about our leaders reaching agreement on an aid package today than I did a week ago.

“Let me get to the not so good news. There is still no agreement, and time is running out.”

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Southwest’s CEO Gary Kelly. Photo: Getty Images

Bill for further funding gets bogged down in Washington

Congress remains deadlocked over a new relief bill to extend the $2.2 trillion package provided under the CARES Act in March. That saw some republican senators try to take matters into their own hands. But attempts to fast-track legislation introduced by Senator Roger Wicker this week were hampered by other senators who raised objections.

Senator Wicker’s bill plans to tip a further $28 billion in funding into the airline industry. The money would come from fresh appropriations and unused CARES Act monies.

“The CARES Act successfully saved thousands of jobs that support the airline industry,” said Senator Wicker in a statement.

“However, the market has not turned around as much as we had hoped, and additional relief is needed.”

But the US Treasury Secretary said he could not access unused emergency funding and divert it to the airline industry.

“The current situation is very fluid,” says Gary Kelly,” there are a few ongoing efforts in Washington to extend the payroll support program. We’re supporting all of them and leaving no stone unturned.”

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The airline CEOs are arguing it is in the national interest to keep CARES Act funding going. Photo: Chicago O’Hare Airport

Threats to the broader US economy

The situation across the US airline industry is critical. Twelve months ago, the airlines were posting multi-billion-dollar profits. Now they are posting multi-billion-dollar losses. Passenger numbers have crashed, impacting revenue. It is estimated revenue across the industry is down by 85%.

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The airlines argue, and many agree with them, that they are a key cog in the broader economy. Mass layoffs, the scaling back of services, and the emasculation of the industry will have severe ramifications across the broader United States economy.

Meanwhile, there are hopes the Treasury Secretary, Steven Mnuchin, can do a deal with House Speaker Nancy Pelosi to pass a last-minute extension. For airline CEO’s like Gary Kelly, the clock is ticking.

“Without it (funding), the airline industry will dramatically shrink. Tens of thousands of jobs will be lost, and there will be painful reductions in air services to communities across the countries.”

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