Clock Running Out Before Some Airlines Begin Furloughs

In March, Congress approved $25 billion mostly in grants to cover passenger airline payrolls through September and up to another $25 billion in loans that the airlines could use for other purposes. Late Tuesday, the Treasury Department said it completed loans to seven major airlines: American, United, Alaska, JetBlue, Frontier, Hawaiian and SkyWest.

The payroll aid came with conditions including a prohibition on involuntary layoffs or furloughs, but that ban ends after Wednesday. In announcing the closure of the loans to airlines, Treasury Secretary Steven Mnuchin made a pitch for Congress to extend the payroll help “so we can continue to support aviation industry workers as our economy reopens and we continue on the path to recovery.

U.S. air travel remains down nearly 70% from a year ago. Signs of a modest recovery faded this summer when COVID-19 cases spiked in many states. International travel is even weaker.

Airlines have persuaded tens of thousands of employees to take early retirement or severance deals. But even after those offers, the airlines have more workers than they need, and indications point to around 40,000 furloughs of flight attendants, mechanics, ramp workers, pilots and others beginning this week.