The US government is considering a further $15 billion in payroll support for aviation workers as the industry hopes for recovery this year.

Lawmakers are weighing a second extension of a programme initially launched at the beginning of the coronavirus pandemic, designed to save aviation jobs as passenger demand fell precipitously in the wake of stay-at-home orders and travel restrictions.

In a memorandum dated 4 February, the House of Representatives’ financial services committee outlines a proposal that would make available $15 billion in aid to airlines under the same conditions as previous plans. Notably, airlines that take funds would be prohibited from laying off staff.


Source: Spirit Airlines

US government considers further aid to airlines

The CARES Act, which in March 2020 provided $58 billion in grants and loans to passenger air carriers, secured jobs through a payroll support programme (PSP) until 30 September. On 1 October, when that aid expired, airlines furloughed more than 30,000 employees. Those job losses were in addition to the tens of thousands of workers who took advantage of carriers’ various volunteer layoff and early retirement schemes.

In December, the US government approved a new programme, dubbed “PSP2”, which made another $15 billion in payroll aid available to airlines. That funding, which required airlines to rehire furloughed workers, runs through March 2021. Airlines reinstated the employees, even though their schedules and networks could accommodate just a fraction of them. 

Airlines have said that recalls will likely be temporary if travel demand does not significantly improve by the end of the first quarter of the year. That now looks unlikely. New travel restrictions, including a mandatory testing requirement for all inbound international arrivals, and talk of testing requirements for domestic travellers, continue to burden the industry.

The third tranche of aid would help the airlines until 30 September 2021. The $15 billion includes $14 billion earmarked for workers of eligible carriers and $1 billion to support contracted workers.

“According to some estimates, major US airlines lost over $35 billion in 2020, and although demand for air travel has increased in recent months, airlines do not expect to return to profitability until midway through 2021,” the memorandum reads. “One airline executive warned that December’s “recall [of workers] will be temporary,” suggesting that airlines will proceed with layoffs without more aid.

United Airlines and American Airlines in recent weeks warned a combined 27,000 employees that their jobs were at risk.

“Based on current demand… we will not fly all our aircraft this summer as planned,” said Fort Worth-based American in a 3 February employee memo. “Consequently, like last fall, we will have more team members than the schedule requires after federal payroll support expires.”

Airline executives continue to hope that confidence and demand will return as vaccinations ramp up in the coming months.