July 13, 2024

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Loans or grants? White House, Congress debate airlines’ coronavirus relief request

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A senior lawmaker with jurisdiction over federal transportation funding said Wednesday he supported the airline industry’s request for a combination of grants and loans to help with the financial fallout from the coronavirus pandemic.

Rep. David Price, D-N.C., the chairman of the House Transportation and Housing and Urban Development Appropriations Subcommittee, told McClatchy in an interview Wednesday that both grants and loans were useful in this situation.

“The immediate cash infusion is important in some instances, but so is the longer-term finance that can come from very generous loans,” he said.

On Monday, airlines asked the federal government for nearly $50 billion in federal relief — half for grants, half for loans.

The administration signaled on Wednesday it was mainly focused on loans for airlines, with the Treasury Department telling congressional leaders to consider establishing a $50 billion “Airline Industry Secured Lending Facility” for U.S. passenger and air cargo carriers.

While Price could not commit to how much money Congress would give the airlines, he said he was sympathetic to the industry’s financial needs and its request for different types of support.

“It’s a request based on their best judgment,” Price said of airline officials. “We will assess that and we’re certainly not ruling anything out right now. We’ll come up with a reasonable number and a reasonable ratio of grants to loans.”

The airlines’ request is just one of many transportation sectors asking for the government’s help in the third congressional coronavirus relief package now being drafted on Capitol Hill. Airports want $10 billion to make up for lost revenue, Amtrak wants $1 billion and the cruise line industry also is likely to weigh in with a request from the federal government in the days ahead.

Price said airlines were “leading the pack in terms of the impact we are talking about here,” as the government’s request that Americans stay home if possible and avoid large gatherings to stop the spread of the coronavirus has resulted in sharp drops in air travel.

He also said the airline industry may seek more financial help down the road.

“There are so many questions, so many contingencies, so I think the airline request and numbers we are working with, all have to be seen as tentative in terms of what the totals are going to look like at the end of the day,” he said.

Still, Price said that while the airline’s request was the largest in the transit arena so far, it would not edge out the other industry proposals.

Rep. Sam Graves of Missouri, the top Republican on the House Committee on Transportation and Infrastructure — which, along with the appropriations committee, will play a key role in discussions about which transportation sectors get federal assistance and how much — agreed.

“This crisis is hitting businesses of all kinds, from large companies down to small mom and pop operations, and any action Congress considers now has to take into account this broad cross section,” Graves said in a statement to McClatchy. “The threat to the entire aviation industry — consisting of airports, air carriers, cargo, regionals, manufacturers, maintenance providers, general aviation, and countless related businesses — threatens millions of American jobs.”

The White House has also placed a significant amount of attention on the airlines over the last several days.

President Donald Trump held a call with airline industry executives on Wednesday morning. Later, at the daily White House coronavirus briefing, he told reporters that he sympathizes with the struggling companies and keeping the airline industry afloat is a top priority.

“The airlines would be No. 1,” he said. “They go from having the best year they’ve ever had to having no passengers, because of what we’ve had to do in order to win this war” against the coronavirus pandemic.

Treasury also proposed $150 billion in lending for other industries hit hard by COVID-19. That proposal did not specify which businesses or sectors might receive the money.

Trump said those details remain under discussion with lawmakers, but added he believes hotels and cruise lines should be candidates for financial help.

“We’re talking about all of it,” he said. “Haven’t gotten there yet. But certainly the hotel industry, the cruise ship industry, the airlines. Those are all prime candidates.”

As Congress tries to integrate the administration’s priorities into a formal piece of legislation, leaders in both parties will also be grappling with how to ease concerns among their members that industry relief is tantamount to a federal bailout — a term the White House has denied should apply to current relief discussions on the table.

Sen. Rick Scott, R-Fla., doubled down on his criticism of corporate bailouts in a Fox News Business op-ed on Wednesday.

“We should not bail out large corporations that have enjoyed years of growth and prosperity,” Scott wrote. “I won’t support it.”

Democratic Sens. Richard Blumenthal of Connecticut, Ed Markey of Massachusetts, Sheldon Whitehouse of Rhode Island and Tammy Duckworth of Illinois sent a letter to Senate leaders saying they won’t support making payments to airlines and cruises without certain reforms.

The four lawmakers said airlines must be required to end “anti-consumer conduct” such as “price gouging, involuntarily denied boarding, shrinking seats, baggage mishandling and more,” and cruises must adopt stricter health and safety protocols to handle emergencies like the coronavirus.

The Treasury Department memo stipulates that the administration supports “limits on increases in executive compensation until repayment of the loans” when it comes to airlines.

Price said he anticipated “guardrails” being put in place to make sure funds are not spent inappropriately by recipients of financial help, but emphasized that no decisions have been made in these very early stages of negotiations.

Francesca Chambers contributed to this report.

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