Democrats Press Delta, JetBlue to Reverse Cuts After Bailout

(Bloomberg) -- Senate Democrats are asking Delta Air Lines Inc. and JetBlue Airways Corp. to reverse a decision to cut employee hours after collectively taking more than $6.3 billion in federal money to pay workers during the coronavirus crisis.

Lawmakers including former presidential candidates Elizabeth Warren and Bernie Sanders, plus Sherrod Brown, the top Democrat on the Senate Banking Committee, wrote to the airlines on Thursday warning that they could be in legal trouble if they require employees to work less.

“Your decision to cut employee hours is inconsistent with congressional intent and is a blatant and potentially illegal effort to skirt your requirements to keep workers on payroll,” the lawmakers said in the letter.

The airline slice of the $2.2 trillion pandemic relief law, called the Cares Act, was aimed in part at helping employers keep workers on the job. It required airlines to refrain from layoffs until the end of September in exchange for federal aid. The legislation specifies that no change to pay rates is allowed, but it doesn’t contain language about minimum work hours or income levels.

Delta took $5.4 billion in federal money. JetBlue took almost $936 million. United Airlines Holdings Inc., which took nearly $5 billion, also announced cuts to workers’ hours. It later said those reductions would be voluntary, after objections raised by the International Association of Machinists and Aerospace Workers.

Not ‘One Penny More’

“You should do the same, and not take one penny more of bailout funds unless you are prepared to protect your workers’ jobs, pay, and benefits, as intended by Congress in the Cares Act,” the lawmakers wrote to JetBlue and Delta.

JetBlue’s offer of voluntary time off and unpaid leave programs is consistent with Cares Act requirements and was necessary, given that the payroll assistance only covers 76% of costs, the airline said in a statement.

The carrier said it needs fewer workers because its daily schedule of about 100 flights is just 10% of normal operations, meaning “there are quite literally no hours for our crew members to work in many places.” None of the programs are aimed at reducing full-time employees to part-time status, JetBlue said.

Delta said in a statement the work hour reductions comply with the Cares Act and will ultimately protect jobs.

Demand Cratered

Travel demand fell more than 95% from year-ago levels amid the coronavirus outbreak and related government travel restrictions. Airlines have parked aircraft, cut flying and offered employee leave and early retirement programs in response. While demand has bounced back slightly, airlines say it remains substantially below 2019 levels and a recovery is expected to be slow.

United has said it plans to lay off 3,800 workers in October when the employment requirement lifts, a move that Treasury Secretary Steven Mnuchin said on Tuesday complies with the law. The airline said Wednesday it’s working with its unions to craft voluntary leave programs and other options that could help prevent furloughs after Sept. 30.

Tens of millions of people have lost their jobs in two months as a result of social distancing measures and stay-at-home orders designed to slow the spread of Covid-19.

Unemployment is expected to remain elevated through the end of next year, and Federal Reserve Chairman Jerome Powell told lawmakers this week that longer-term joblessness risks extended damage to the economy.

©2020 Bloomberg L.P.

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