The US Transport Workers Union (TWU) has suggested that Dallas-based Southwest Airlines could reject a COVID-19 rescue package set to be approved by the US House of Representatives.
The stimulus, which promises more than $58 billion in aid for the aviation industry, was passed by the Senate on Wednesday.
However, attached to the deal are a number of potential bailout conditions, including “restrictions on dividends and share buybacks, requirements to keep employment levels stable through September and limits on executive pay”.
The Wall Street Journal reported on Thursday that the package may also require airlines to grant equity stakes in return for funding, citing Treasury Secretary Steve Mnuchin.
According to the TWU and other unions representing Southwest employees, these conditions could push the airline to try to brave the downturn on its own.
“Some airlines may want to try and weather the storm while laying off members to get them off the payroll,” said Bret Oestreich, national director of the Aircraft Mechanics Fraternal Association (AMFA), which represents about 2,800 employees at Southwest.
The TWU and AMFA have both urged employees to reject a deal proposed by the airline, which offers its flight attendants voluntary leave at 50 per cent pay. Under the deal, accrued leave and other benefits would not need to be cashed in.
“The company created this emergency time off program blindly, quickly, and with complete disregard for what is being negotiated and approved by Congress,” Transport Workers Union Local 556 said in a letter to members.
“Southwest Airlines also claims that they ‘retain the right to reject the government funding and the strings that come with it’.”
This development has struck analysts and Southwest employees alike as unusual, given Southwest chief executive Gary Kelly has been one of the stimulus bill’s most vocal advocates. Despite spending previous weeks lobbying on its behalf, Kelly has stayed relatively quiet on both the bill’s approval by the US Senate, and the subsequent union blowback against the deal.
“The CARES Act is massive, includes many complexities and nuances, and provides the Departments of Treasury and Transportation with the authority to interpret and implement the bill’s many provisions and conditions,” said Southwest Airlines spokesman Chris Mainz.
“We also understand the Treasury Department will have several days to outline the procedures for applying for government assistance, after the bill is signed into law.”