Lawmakers are urging the Secretary of the U.S. Treasury, Steven Mnuchin, to block U.S. airlines from laying off workers or cutting pay after they received support to cover payroll under the CARES Act.
Under the legislation, intended to reduce economic trauma brought on by the coronavirus pandemic, airlines received grants and loans from a $25 billion aid package with the condition that they not make cuts to their workforce or reduce the rate of pay or benefits of workers through September 30.
Delta, JetBlue, and United Airlines have all either begun cutting worker schedules or announced plans to do so. On Wednesday, United asked workers to volunteer to reduce their schedules after the International Association of Machinists and Aerospace Workers, which represents some 27,000 United employees, sued United in federal court in New York.
“In light of Congress’ clear intent, we are troubled by several air carriers’ recent announcements that tens of thousands of employees will have their hours reduced,” Senators Sherrod Brown, Maria Cantwell, and Charles Schumer wrote. The lawmakers also urged Mnuchin to issue guidance clarifying that unilateral decisions to reduce workers’ hours were prohibited under the CARES Act.
Senator Josh Hawley of Missouri also expressed concern. “It was not the intention of Congress that recipients of this taxpayer money would then turn around and disguise pay reductions by cutting hours,” Hawley told United CEO Oscar Munoz in a letter. “You must keep your promises to your workers or give the money back.”
United had said it plans to cut the hours of 15,000 airport workers to part-time as of May 24. It said involuntary schedule cuts would take place if enough volunteers weren’t found to accept reduced hours. The company received $5 billion in financial assistance.
Airline executives have said they expect it will take years for the industry to recover after demand plummeted due to the global health emergency.
On Monday, Warren Buffett announced he had sold all of Berkshire Hathaway’s stock in United, American Airlines, Delta Air Lines, and Southwest Airlines, worth about $6.5 billion in total, in April, saying he had made a mistake in valuing the companies.
The Treasury Department declined to comment.
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