- The Trump administration’s delays in implementing a coronavirus bailout program “resulted in more than 16,500 layoffs and furloughs at 15 companies—more than 15 percent of the aviation contractor workforce,” a congressional investigation concluded.
- The Treasury Department “incentivized” companies to fire workers without consequence while they awaited funds, according the House Select Subcommittee on the Coronavirus Crisis’ report earlier this month.
- In several cases, aviation contractors didn’t rehire any workers once they received the money, and two even used it to restore pay for executives.
- Negotiations on additional coronavirus aid have stalled since Trump signed the last relief bill in April, with Democrats, Republicans, and Trump unable to come to an agreement.
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The Trump administration’s mismanagement of a coronavirus bailout program that Congress created to “preserve aviation jobs” has instead led to 16,655 layoffs across the industry while overpaying companies that fired workers, a congressional investigation concluded earlier this month.
The Payroll Support Program, which was established under the CARES Act and expired this month, tasked the US Treasury Department with allocating $3 billion to aviation contractors to help them avoid unnecessary layoffs as the pandemic ground travel to a halt.
The money was intended to cover companies’ payroll for six months, until September 30, and in exchange, recipients were supposed to keep workers employed for those six months.
But the Treasury Department’s “delays” and “perverse” approach to implementing the PSP encouraged companies to fire workers while they waited to receive funds, the House Select Committee on the Coronavirus Crisis concluded in a report published on October 9.
The Treasury Department did not respond to a request for comment on this story.
Despite the CARES Act requiring the Treasury Department to start disbursing funds by April 6, it didn’t send the first payment until May 15, while some contractors didn’t get paid until September, according to the committee’s report.
“These delays led at least 15 different aviation contractors to lay off or furlough at least 16,655 employees before the agreements took effect, more than 15% of the existing aviation contractor workforce.” it said.
The Treasury Department also let companies continue to lay off workers while their PSP applications were pending — without adjusting their payout amounts, without requiring them to rehire those workers, and without imposing deadlines by which they had to spend the funds, the report said.
“This decision had the perverse effect of incentivizing companies to lay off or furlough workers before executing the agreement,” “stockpile the money rather than rehire laid-off workers,” and receive “payroll support for jobs that no longer existed,” it added.
Internal emails from Swissport, which received more than $170 million from taxpayers, revealed that it “‘urgently’ sought to ‘furlough or terminate’ staff before signing the PSP agreement to avoid ‘unnecessary costs once the ink is on the paper,'” the report said.
Along with Swissport, Gate Gourmet and Flying Food Fare were some of the worst abusers of the loopholes created by the Treasury Department, according to the report, laying off or furloughing a combined 13,070 workers after the PSP applications opened.
Swissport, Gate Gourmet, and Flying Food Fare did not respond to a request for comment on this story.
Some companies even used the funds to pay top executives even as they continued layoffs or hadn’t yet hired back workers they already let go, according to the report.
Flying Food Fare, which ultimately got more than $85 million from taxpayers, “restored senior executives and management to full pay” in anticipation of receiving its funds even as it laid off 477 workers in May alone.
Gate Gourmet fired 4,958 and furloughed 104 workers after it submitted its PSP application. But while it brought some back after it received the funds, unlike other contractors, it returned management to “full salaries” following their 20% pay cut in April — despite thousands still being out of work, the report said.
While the CARES Act sought to inject more than $2.2 trillion into a US economy pummeled by the coronavirus, relief has not always been distributed as Congress had hoped. Large companies were criticized for taking Paycheck Protection Program loans that were intended for small businesses; companies connected to Trump’s son-in-law Jared Kushner have received millions in PPP loans; and private jet companies triple-dipped CARES Act funds as the rest of the industry struggled.
Congress, meanwhile, has been unable to agree on additional stimulus, with Democrats arguing for a larger package, Republicans pushing for less, and Trump oscillating between telling Congress to go “big or go home” and completely killing talks between the two parties.
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