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Democrats want probe of airline Covid bailouts over staff buyouts

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Airline pilots walk through the Ronald Reagan Washington National Airport on December 27, 2021 in Arlington, Virginia.

Anna Moneymaker | Getty Images

Two House Democrats have asked a Treasury Department watchdog to analyze whether airlines used a portion of a federal coronavirus relief package to pay for employees buyouts in the course of the pandemic.

Airlines were prohibited from shedding staff as a condition of accepting $54 billion in taxpayer aid to weather the Covid-19 pandemic. Travel demand collapsed within the early days of the crisis. Nonetheless, carriers were capable of urge staff to take early retirement packages or prolonged leaves of absence. 1000’s took them up on the offer, including tons of of pilots.

Rep. Carolyn Maloney, D-N.Y., chairwoman of the House Committee on Oversight and Reform, and James Clyburn, D-S.C., chairman of the Select Subcommittee on the Coronavirus Crisis, on Thursday asked the Treasury Department’s watchdog to review how airlines used the Covid-19 aid and whether it was used for buyouts or staff reductions, based on a letter reviewed by CNBC.

Airlines for America, a trade group which represents American, Delta, United, Southwest and other major U.S. carriers, said the funds from the Payroll Support Program for airlines “went only to the paychecks of employees, as stipulated by law, and carriers have paid back the federal government loans.”

“Without the PSP, our aviation system would appear like Europe, Canada or other areas that didn’t have any similar program,” the group said in a press release. “And even worse, if not for the PSP, we is probably not flying in any respect.”

When travel demand rebounded sharply this yr, airlines found themselves short-staffed, including in cockpits. Consequently, some airlines, including American and United, cut flights or grounded dozens of planes, particularly to small cities. Shorter routes are flown generally by regional airlines, and airlines have hired tons of of latest pilots from those smaller carriers to fill their very own ranks.

Labor shortages this yr have made it harder for airlines to get better from routine issues equivalent to bad weather.

“Consequently of pilot shortages, 1000’s of flights have been delayed or canceled, wreaking havoc on travel plans for hundreds of thousands of American taxpayers,” the lawmakers wrote of their letter to Treasury Department Deputy Inspector General Richard Delmar.

Delmar confirmed that he received the letter and said his office plans to answer the lawmakers in the approaching days.

The Treasury Department declined to comment.

Maloney and Clyburn asked the watchdog for preliminary results by Sept. 22.

U.S. carriers began 2020 with 456,398 full-time equivalent employees, which fell to 363,354 in November of that yr, based on the Department of Transportation. Airlines have been on a hiring spree for greater than a yr, and in June had 455,642 full-time equivalent employees.

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