Senate Republicans have proposed extending up to $50 billion in secured loans to passenger airlines and up to $8 billion in secured loans to cargo carriers as part of the Covid-19 economic rescue package.

The proposed legislation, put forward by Senate majority leader Mitch McConnell on Thursday, would also allocate $300 billion to small business of 500 people or less. 

The proposal falls well short of the request airlines made early this week for $25 billion in grants to go along with $25 billion in loans. In addition, loans to airlines would come with stipulations. 

Notably, airlines would be prohibited from giving raises to anyone through February 2022 whose total compensation was $425,000 or more last year. 

Also, the Department of Transportation would have the authority to require airlines that accept a government loan to continue flying to destinations served before the Covid-19 crisis began -- a move designed to assure continued air service to small communities. 

The bill would also allow the U.S. Treasury to share in airline profits, with the terms of such arrangements spelled out in loan contracts. 

Such measures, however, don’t appear to be enough to satisfy Democrats in Congress, who have joined labor unions in calling for any airline rescue package to emphasize workers.

“We are beginning to review Senator McConnell’s proposal and on first reading, it is not at all pro-worker and instead puts corporations way ahead of workers,” Senate minority leader Chuck Schumer tweeted Thursday evening. 

In a joint statement Thursday, Schumer and speaker of the House Nancy Pelosi said that to earn Democratic support, any economic stimulus package “must include new, strong and strict provisions that prioritize and protect workers, such as banning the recipient companies from buying back stock, rewarding executives and laying off workers.”

The rescue bill also would provide direct payments to taxpayers. Most individuals who reported income of less than $75,000 in 2018 would receive a check of $1,200 and couples who reported less than $150,000 would receive a check for $2,400. Families would get an extra $500 monthly for each dependent child. 

U.S. airlines made a net profit of nearly $100 billion between 2013 and the third quarter of 2019, according the Bureau of Transportation Statistics, but according to a Bloomberg analysis, they have used 96% of their free cash flow in the past decade on stock buybacks.

Like Pelosi and Schumer, airline industry unions have called for the rescue package to contain strong provisions protecting them from layoffs and ensuring benefits, such as health care. 

Airlines on Friday said the Senate Republican proposal doesn’t offer enough relief to beleaguered carriers. 

“Loans alone are not sufficient and should be coupled with a worker payroll assistance program and targeted tax relief, which will allow airlines to keep operating through this crisis and protect the 750,000 jobs of hard-working individuals who are directly employed by the industry,” said trade group Airlines for America.

The Regional Airline Association (RAA), whose members serve small and medium-sized communities, mostly flying under the American Eagle, Delta Connection and United Express brands, offered more emphatic criticism. 

“The bill was designed to support airlines through loans secured by assets, RAA CEO Faye Malarkey Black said. “Regional airlines do not have the same assets that larger airlines have. In many cases, regional airlines lease their fleet. In all cases, regional aircraft do not have the same value as mainline aircraft.”

She noted that two-thirds of U.S. airports are served only by regional carriers. 

“While the bill suggests the [DOT] secretary may require some air service to small communities, these small communities are served exclusively by regional airlines,” Malarkey Black said. “As written, there would be no regional airline in a position to serve any market, let alone the smallest ones.”

The bill is more generous to small business. Loan forgiveness would be provided to companies who use the funds to pay employees.

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