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Democrats want Mnuchin to explain why bailed-out airlines are cutting staff’ hours


House Democrats want Treasury Secretary Steven Mnuchin to explain why airlines are getting away with cutting staff’ hours after they acquired parts of $25 billion in authorities coronavirus aid funds aimed toward sustaining employee payroll.

The lawmakers additionally want Mnuchin to explain whether or not he informed the airlines they have been permitted to lower the hours. 

Airlines, together with DeltaJetBlue and United, have introduced or already lower the schedules of their hourly staff to cut back prices after air journey demand fell to the bottom in many years. That’s regardless of having accepted authorities help as a part of the $2.2 trillion CARES Act, on the situation they withhold from shedding or cutting employee pay charges via Sept. 30.

“United, Delta, and JetBlue airlines have all unilaterally cut workers hours – in some cases significantly decreasing these employees’ pay and benefits,” Reps. Jan Schakowsky and Jesus Garcia of Illinois, and Katie Porter of California, wrote in a letter to Treasury obtained by CNBC that they plan on delivering later Tuesday. 

“The creative position held by these airlines is that an hours cut is somehow unrelated to compensation, which is protected under the CARES Act. The hour cuts imposed by these carriers have made some workers eligible for unemployment assistance – a circumstance the legislation was explicitly designed to prevent. These carriers are very clearly out of compliance with the letter and spirit of the law.”

The House lawmakers of their letter Tuesday pushed Mnuchin to launch pointers clarifying that decreasing hours can be in violation of the CARES Act. They additionally want to know whether or not he, or different members of the division, had any prior communication with airline carriers about whether or not it will be acceptable for them to lower employee hours. 

“Please disclose whether you or any other Treasury officials provided carriers with guidance that cutting worker hours would be allowable under the terms of the CARES Act,” they wrote.

“If so, which carriers did you and your team consult with and what guidance did you provide?”

The letter follows an identical letter from Sens. Charles Schumer, D-N.Y., Maria Cantwell, D-Wash., and Sherrod Brown, D-Ohio to Mnuchin earlier this month. And final week, 13 Senate Democrats wrote to the CEOs of Delta and JetBlue, saying: “When it comes down to what’s in an employee’s paycheck, reducing hours and cutting pay have the same effect: less money for workers to take care of themselves and their families.”

New York-based JetBlue mentioned it’s compliant with the phrases of the federal help.

“In full compliance with the CARES Act requirements, we put in place a variety of programs with an emphasis on voluntary time off and unpaid leave programs,” it mentioned in a press release. “Given that our flights in many cities are completely suspended and are significantly reduced in others, there are quite literally no hours for our crewmembers to work in many cases.”

Delta additionally mentioned its “work schedule reductions, which comply with the CARES Act, ultimately protect jobs.”

Delta has diminished non-flight attendant and pilot work schedules, resembling floor staff, by 25%. Those diminished schedules are set to proceed for a number of months.

“As I mentioned during our virtual town hall last week, given the substantially reduced current demand for our product, the schedule reduction for ground-based hourly and merit employees will need to be extended through September,” Delta CEO Ed Bastian mentioned in a workers observe final Thursday, which was seen by CNBC. “This is consistent with the reduced flying schedule and hours for our flight crews.”

Airlines have urged staff to take voluntary partially paid or unpaid leaves to assist the airline cut back prices. 

United mentioned that below the CARES Act any worker furloughs are voluntary.

“We are taking proactive, cost-cutting measures to offset an unprecedented drop in travel demand and to help us achieve our overall goal to preserve as much financial flexibility now so we can not only survive this crisis, but thrive once it is behind us,” United mentioned in a press release.

The Chicago-based service earlier this month backed away from some mandatory schedule modifications after an outcry and lawsuit from the union that represents its fleet and customer support staff.

Democrats, with the urging of unions, pushed to give airlines monetary assist in hopes of supporting an trade that employs shut to 750,000. Providing federal grants to defend staff was a very politically thorny problem. Lawmakers have been criticized for granting airlines related aid after the September 11 assaults, solely to go away some staff holding the bag.

Some of the airlines that took that authorities funds within the wake of the assaults practically 20 years in the past, together with United Airlines, in the end filed for chapter. As a part of United Airlines chapter, it terminated 4 pension plans, which have been then underfunded by greater than $10 billion.

Meantime, previously 5 years, the nation’s largest U.S. carriers — Delta, American, Southwest and United — have collectively spent roughly $39 billion shopping for again their inventory, in accordance to a tally from S&P Dow Jones Indices.

“The financial outlook is dire for the airline industry, which is why Congress supported U.S. commercial aviation in recent relief packages,” the lawmakers wrote Tuesday.

“However, our intent has always been to protect airline workers (as the title of this section of the CARES Act makes clear), not corporate salaries or shareholders. The need for protections like these has been made clear over the past several years as the commercial aviation industry spent record profits on stock buybacks, which overwhelmingly benefit institutional investors and individuals with stock options.”

Meantime, the lawmakers additionally took goal at  Mnuchin for not serving to 350 staff at Miami Air, a constitution air firm that filed for chapter in March and later introduced plans to liquidate. 

“Company executives were directly in touch with the Treasury to secure payroll assistance, to no avail,” they wrote. 



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