Airlines May Pick Bankruptcy Over Government Aid

Top Democrats are warning the Treasury Department not to make the cure worse than the disease when it comes to coronavirus support for airlines. House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer said in a letter to Treasury Secretary Steve Mnuchin they’re afraid the White House will drive too hard a bargain with the airlines and they’ll risk bankruptcy rather than accept the government help. “Assistance must not come with unreasonable conditions that would force an employer to choose bankruptcy instead of providing payroll grants to its workers,” they wrote in the letter, which was reported by The New York Times on Sunday.

The Trump administration is anxious to prevent airlines from using government bailouts to buy back their own stock to create value for shareholders rather than diverting the cash to keeping employees on the payroll. Mnuchin is demanding airlines pay for the assistance by giving the government a stake in their businesses, something they’re reluctant to do. Pelosi and Schumer said the intent of the assistance is to keep employees on the payroll and they urged Mnuchin to keep that focus. “We urge you to quickly and fairly enter into direct payroll assistance agreements with each of the carriers and contractors provided for in the law,” they said. Neither the administration nor the airlines have commented on the letter.