Democrats urge Mnuchin to avoid ‘unreasonable’ terms on airlines

House Speaker Nancy Pelosi and Senate Democratic leader Chuck Schumer urged the Treasury Department to move more quickly to help airlines to save industry jobs and refrain from imposing “unreasonable conditions” that might spur some carriers to decline payroll assistance.

In a letter Sunday to Treasury Secretary Steven Mnuchin, Pelosi and Schumer stressed that provisions of the $2.2 trillion stimulus passed by Congress were aimed specifically at bolstering aviation jobs. The lawmakers expressed concern that guidelines released by the department a week ago didn’t go far enough to safeguard workers.

“We are concerned that Treasury Department’s recent guidance on the ‘Airline Industry Payroll Support’ Program does not fully reflect the intent of Congress,” they wrote in the letter, which also was signed by House Transportation Chairman Peter DeFazio and Sherrod Brown, the ranking Democrat on the Senate Banking Committee.

Pelosi and DeFazio have previously said that demands for airline equity stakes in exchange for the $25 billion in grants designed to save jobs are onerous and could prompt carriers to decline the help.The industry faces steep declines in travel due to the Covid-19 pandemic. The Treasury on March 30 released guidelines for how airlines could apply for grants and loans, but stopped short of saying what the minimum stakes would be. It said airlines would be required to propose up-front how the government could retain stakes in their companies, possibly with stock, options or warrants.

Pelosi, Schumer and the others said that some airlines might choose bankruptcy instead of taking payroll grants if the terms are too tough. Similar concerns have been raised by a regional airlines trade group and flight-attendant unions.

“While we appreciate the Department’s desire to seek ‘warrants’ in exchange for payroll assistance, we do not support any effort that would undermine the ability of any aviation worker to receive direct payroll assistance,” the four lawmakers said in their letter.

The stimulus package included provisions for grants of $25 billion to passenger carriers, $4 billion for air-cargo haulers and $3 billion for contractors such as meal providers. They were designed to limit layoffs, and businesses that accepted them had to agree not to cut pay or trim staff through September. The Treasury was authorized to receive “financial instruments” such as equity in exchange.