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Flight Attendants Fear ‘Poison Pill’ in Government Grant Program

April 1, 2020, 2:16 PM

Flight attendant unions are urging Treasury Secretary Steven Mnuchin not to force U.S. airlines to provide equity stakes in exchange for government grants, arguing that the move amounts to “a poison pill” that will lead to job losses.

The CARES Act, signed into law Friday, allows for $25 billion in cash grants for airlines to cover workforce wages for six months. The measure allows U.S. officials to require an ownership stake in return.

But that condition could keep carriers from accepting funds to meet their payrolls and wind up causing the job losses the grants were trying to avoid, the unions said in a letter.

“If the airlines were required to pay back the grants in full with an equity position of $25 billion, that would give the government the equivalent of a 40% stake in airlines,” said the letter sent Wednesday by three unions representing about 94,000 flight attendants. “This effectively renders the payroll grants a poison pill that will cost us our jobs and push us onto taxpayer-funded unemployment insurance --the opposite of what this bipartisan agreement intended.”

Other provisions in the CARES Act, such as for small businesses, don’t require restaurants to offer the government an ownership stake for grants to keep cooks and waitstaff on their payrolls, the unions told Mnuchin.

The unions said they support requiring stock warrants for any government loans that airlines accept, allowing taxpayers to reap a portion of airline profits.

The letter was sent by the Association of Flight Attendants-CWA, which represents about 50,000 workers at United Airlines Holdings Inc. and several other airlines; the Association of Professional Flight Attendants, which represents 27,000 American Airlines Group Inc. attendants; and the Transport Workers Union Local 556, which represents 17,000 attendants at Southwest Airlines Co.

To contact the reporter on this story:
Justin Bachman in Dallas at jbachman2@bloomberg.net

To contact the editors responsible for this story:
Brendan Case at bcase4@bloomberg.net

Susan Warren, Tony Robinson

© 2020 Bloomberg L.P. All rights reserved. Used with permission.

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