Grants for airlines on the table, despite criticism of bailouts
Grants for battered U.S. airlines are on the table in talks over a $2 trillion stimulus, despite criticism of “bailouts” voiced by numerous senators from both parties, according to a senator familiar with the negotiations.
The airline industry, which spent more than $24 million lobbying Congress in 2019, has mounted a furious lobbying campaign to expand federal assistance for their member companies in the stimulus package.
“They’re calling everybody,” one Democratic senator said of the airlines’ intense lobbying push.
One person familiar with the behind-the-scenes efforts said airlines have also called Senate Minority Leader Charles Schumer (D-N.Y.), who is leading the talks with Treasury Secretary Steven Mnuchin.
A spokesman for Schumer did not respond to a request for comment.
Mnuchin said last week that he was having conversations “around the clock” with airline CEOs.
The economic crisis has sparked fears that major U.S. air carriers may default on their debt.
Fitch Ratings downgraded its outlook for United Airlines to negative on Thursday amid fears about its ability to pay back loans. S&P Ratings downgraded Boeing’s credit rating to just two notches above junk on Monday.
A Senate Republican proposal unveiled last week would provide $50 billion in collateralized loans backstopped by the Federal Reserve for airlines, after GOP lawmakers pushed back against the idea of straight grants during a lunch meeting with Mnuchin.
Airlines also requested $30 billion in grants to offset steep declines in air travel because of Centers for Disease Control and Prevention recommendations. That idea, however, ran into opposition from GOP lawmakers last week.
Asked whether grants for airlines are still under consideration, White House Legislative Affairs Director Eric Ueland on Monday said negotiators are discussing a variety of options to get aid to distressed industries as quickly as possible.
“The mechanics of what could be applied to the airline industry” and “what form” that aid will take “are part of the discussion” among Schumer, GOP leaders and the airline industry, he said.
“You’ve got to get the balance right to make sure at the end of day this aid can get out to ensure that there is support for struggling industries and challenged sectors,” he said. “You want to make sure you do that in a very quick way, so ideas about how to do that, which have been part of the discussions the past few days with Democrats and Republicans, need to be reviewed with that in mind.”
The idea of providing direct grants to hobbled airlines appeared dead just a few days ago.
Some Republican lawmakers told Mnuchin at a lunch meeting last week that while they could support collateralized loans, they would oppose direct grants to airlines.
“A lot of us are against a bailout,” said Senate Appropriations Committee Chairman Richard Shelby (R-Ala.).
“They have a lot of collateral,” he said of major airlines. “Collateralize the loans. Make sure they’re paid back.”
“As far as writing a check for bailout, I’d be totally against that,” he added.
Sen. Ben Sasse (R-Neb.) said on the Senate floor Thursday he was not thrilled with the idea of providing billions of dollars in help to the airlines and other industries.
“I don’t like the firm-specific money in [the] legislation, so I don’t like much of the airline section of this bill,” he said.
Schumer wants to make sure that any federal assistance to the airlines will not be used for stock buybacks.
He noted on the Senate floor that that U.S. airlines have spent tens of billions of dollars to boost share prices instead of preparing for an economic downturn.
“I am outraged that the airline industry in the last five years spent about $40 billion on buybacks. They’re now saying they don’t have enough money,” he said.