'Poison Pill' in Stimulus Package Could Cost Millions of Airline Jobs, Labor Leaders Say

Labor leaders Wednesday sent an open letter to Treasury Secretary Steve Mnuchin demanding the White House refuse to exercise a warrant on payroll grants to the airline industry--a "poison pill" in the stimulus bill passed last week that Association of Flight Attendants-CWA international president Sara Nelson said could lead to millions of workers becoming unemployed.

"We need to get this right," Nelson told Common Dreams.

The letter (pdf), signed by Nelson, Association of Professional Flight Attendants national president Julie Hedrick, and Union of Southwest Airlines Flight Attendants 556 president Lyn Montgomery, claims that Mnuchin's power under a late-stage provision added to the CARES Act allows the secretary "the authority to take ownership stakes in the airlines in exchange for any funds that keep workers on payroll."

That reworking of funding to create a payroll "loan" as opposed to a grant, the letter says, is a provision that could lead to the government with a 40% stake in the airlines--effectively eliminating any chance of the airlines taking the available funding in the bill out of fear of public ownership.

"If the airlines were required to pay back the grants in full with an equity position of $25 billion, that would give the government the equivalent of a 40% stake in airlines in exchange for keeping workers on the payroll for six months," the letter reads. "This effectively renders the payroll grants a poison pill that will cost us our jobs and push us onto taxpayer-funded unemployment insurance--the opposite of what this bipartisan agreement intended."

Nelson, in a statement, expounded on what she said was an unfair standard for her industry.

"Grants are grants," said Nelson. "There is no value attached because there is not an expected return on a grant. Much like an education grant, the value is in the student who contributes their learning to society."

"The value here is a functioning airline industry, no layoffs, and 2 million people who can still pay taxes because they are employed," Nelson continued. "We are not aware of a single grant in U.S. history having a warrant attached. This is what you call a con. Not a grant. The old switcheroo. Here's a five dollar bill for free, pay no attention while I pick your pocket."

In an interview with Common Dreams, Nelson said that the 11th hour changing of the terms in the bill for $2.5 billion in funding for airline workers--flightcrews and airport workers--would present the industry with more than enough reason to reject the funding and turn to other protections.

"By putting onerous conditions on these payroll grants, the government is going to make them opt for bankruptcy," said Nelson.

Meanwhile, hours for airline workers are being cut across the industry--with workers at non-unionized Delta feeling some of the worse effects. Labor activist and former Delta employee Kip Hedges told Common Dreams Wednesday that the company's full-time ramp workers and ticket agents were experiencing a 25% weekly reduction in hours, from 40 to 30, and that "ready reserve" workers were seeing hours cut by 50%.

"Delta's action stands in stark contradiction to the intent of the bailout package," said Hedges.

According to CNBC, the cuts in hours are part of a pattern:

While hourly rates aren't declining, the amount of work available, is declining. In addition to asking employees to take unpaid leave, airlines are parking thousands of planes, deferring aircraft orders and drawing down on credit lines to shore up cash. Executives are reviewing the details in the aid package and the strings attached to accepting it.

As Nelson said to Common Dreams, the lack of hours available to industry employees due to dropping demand is causing a crunch for workers who would have expected to make up any shortfalls in over-time work--part of what she described as a longstanding problem in the American workforce.

"When work goes away, there's not as much pay to go around," said Nelson, adding that unionized airlines have minimum pay and hours built into their contracts.

But Delta, which has successfully fought against a union for years, is in a different situation.

"Delta, without a contract, is taking measures right now to cut hours where a contract would preclude that," said Nelson.