COVID Bailout Is For People, Not Stocks, Rep. Payne Tells United

NEWARK, NJ — A massive, $58 billion coronavirus bailout is meant to protect people, not stock values, a congressman from New Jersey is warning several airlines, including United.

Earlier this week, U.S. Rep. Donald Payne Jr. reached out to United Airlines CEO Oscar Munoz, telling the company that he’s worried about potential layoffs that could impact thousands of employees at Newark Airport, where the airline has a hub.

Payne represents the state's 10th Congressional District, which includes the following towns in Essex, Hudson and Union County: Bloomfield, East Orange, Glen Ridge, Irvington, Maplewood, Montclair, Newark, Orange, South Orange, West Orange, Bayonne, Jersey City, Hillside, Linden, Rahway, Roselle, Roselle Park, and Union Township.

United is one of several airlines that will benefit from the $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act, which provides $58 billion in grant and loan assistance for airlines to offset the devastating impact of the COVID-19 pandemic on the industry.

According to Payne, airlines that receive assistance under these provisions must comply with conditions for certain periods of time, which include maintaining employment levels as of March 24. Companies getting bailout funds are also prohibited from engaging in stock buybacks.

And that’s why Payne said he was concerned to hear that United has advised employees to potentially expect layoffs after some CARES Act restrictions lapse.

“Media reports indicate that United Airlines may cut labor costs by as much as 40 percent in the fall, depending on demand,” Payne wrote. “Hopefully this does not come to pass.”

READ MORE: NJ Coronavirus Updates (Here's What You Need To Know)

The congressman also said he is troubled by reports that United Airlines is trying to skirt recent Department of Transportation guidance that airlines must provide refunds to passengers.

“According to media reports, United Airlines changed the definition of ‘canceled flight’ to reduce the number of refunds,” Payne charged. “I would be very disappointed if United Airlines intentionally changed its policies to avoid paying out refunds to passengers affected by this pandemic.”

Payne said he hopes other airlines which benefit from CARE Act bailout funds, such as American, JetBlue and Delta, will also heed his warning.

A spokesperson for United Airlines declined to comment on Payne’s letter. However, Airlines for America (A4A), an aviation industry advocacy group that includes United as a member, offered Patch the following statement:

“U.S. carriers have worked since the early stages of this pandemic to respond to customers and update travel policies to offer increased flexibility. A4A carriers are working with each and every customer to address their circumstances and situation. We follow and comply with federal law and regulations on this matter, including offering a refund when carriers cancel a flight. U.S. airlines remain committed to making accommodations that are responsive to travelers’ needs during this unprecedented time. While navigating this crisis, airlines always strive to make the travel experience positive and to find the right balance between protecting and sustaining the jobs of our workers.”

According to A4A, airlines throughout the nation are seeing big dips in ridership, and are “collectively burning an estimated $6 to $7 billion of cash each month.”

A4A airline passenger volumes have fallen 93 percent, and carriers are operating at 83 percent less capacity compared to a year ago, the group stated. Net booked passengers remain devastatingly low – down 94 percent year over year – and booked revenue is down 100 percent.

Payne said he sympathizes with struggling airlines, and is aware that the COVID-19 pandemic has “caused unprecedented disruption in the air travel sector.” He also complimented United for “years of support” for his district.

• See related article: United Airlines Flies Huge Payload Of N95 Masks To Newark Airport

But dipping revenue streams aren’t a free pass to make an end zone run around the spirit of the CARES Act, he added.

“In the last two months, I have received calls and social media posts from constituents who have been denied refunds from airlines for trips cancelled due to coronavirus,” he wrote in a Thursday social media post.

“We put a lot of money in our support packages to help airlines pay them back,” Payne stated. “I was not pleased to hear it is still going on.”

• See related article: NJ May Have To Return $1.8B In Federal Coronavirus Aid

Payne isn’t the only politician concerned about bailout boondoggles amid the coronavirus crisis. Across the Hudson River, New York Gov. Andrew Cuomo recently urged federal lawmakers to avoid past mistakes seen during the Great Recession and refrain from bailing out large corporations without tight regulations governing how they use the money.

Cuomo warned that companies may try to scam Americans by using the pandemic to lay off workers, then rehire fewer workers back to improve stock, dividend and profit value.

• See related article: Gov. Cuomo Warns Corporations Will Try Bailout Scams

Send local news tips and correction requests to eric.kiefer@patch.com

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