The “CV3” Bill’s $32 Billion for Air Carrier Grants – How Will It Work?

The “CV3” Bill’s $32 Billion for Air Carrier Grants – How Will It Work?

March 27, 2020  | Jeff Davis

The third coronavirus response package being passed by Congress this week appropriates $32 billion from the general fund of the Treasury to implement subtitle B of title IV of Division A of the bill (“Air Carrier Worker Support”), in order that the Treasury Secretary “shall provide financial assistance that shall exclusively be used for the continuation of payment of employee wages, salaries, and benefits to—”

  1. “passenger air carriers, in an aggregate amount up to $25,000,000,000”
  2. “cargo air carriers, in the aggregate amount up to $4,000,000,000”
  3. “contractors, in an aggregate amount up to $3,000,000,000”

What’s a contractor? The bill defines “contractor” as a person under contract to a Part 121 air carrier (or a subcontractor to such a person) who performs “catering functions” or “functions on the property of an airport that are directly related to the air transportation of persons, property, or mail, including but not limited to the loading and unloading of property on aircraft; assistance to passengers under part 382 of title 14, Code of Federal Regulations; security; airport ticketing and check-in functions; ground-handling of aircraft; or air1raft cleaning and sanitization functions and waste removal.”

Distributing the money. After deducting up to $100 million of the $32 billion for oversight and administration, the Treasury Secretary is to apportion the money in shares equal to the amount that eligible entities paid in salaries, benefits, and other compensation to employees (which, in this context, excludes corporate officers), in the 6-month period from April 1 through September 30, 2019. For air carriers, this data will be taken from their Part 241 reports. For carriers too small to file such reports, and for contractors, the data will be taken from “sworn financial statements or other appropriate data” submitted to Treasury covering the same period.

The money is to go out quickly – the Secretary is to “publish streamlined and expedited procedures not later than 5 days after the date of enactment” of the bill, and make a round of initial payment to those submitting applications within 10 days of enactment (and enactment could come as quickly as tonight or tomorrow). Subsequent payments shall be made in a “timely manner” as the Secretary sees fit, and at if the total amount paid by carriers and contractors over that six month period in 2019 winds up exceeding $31.9 billion, the bill gives the Secretary the authority to reduce payments to everyone on a pro rata basis to get the total amount under that number.

Restrictive conditions. As one can imagine, in exchange for an aid package of this size (grants that don’t have to be paid back), there are some strings attached. In order to get grants, potential recipients must “enter into an agreement with the Secretary, or otherwise certify in such form and manner as the Secretary shall prescribe, that the air carrier or contractor shall—”

  1. “refrain from conducting involuntary furloughs or reducing pay rates and benefits until September 30, 2020;”
  2. “ensure that neither the air carrier or contractor nor any affiliate of the air carrier or contractor may, in any transaction, purchase an equity security of the air carrier or contractor or the parent company of the air carrier or contractor that is listed on a national securities exchange” through September 30, 2021;
  3. “ensure that the air carrier or contractor shall not pay dividends, or make other capital distributions, with respect to the common stock (or equivalent interest) of the air carrier or contractor” through September 30, 2021;
  4. protect existing collective bargaining agreements as specified in section 4115 of the bill; and
  5. freeze the compensation of executives who made over $425,000 in calendar year 2019 compensation for the two-year period from March 24, 2020 to March 24, 2022, with further limits on severance pay (“golden parachutes”) and even more restrictions on total compensation over $3 million, as defined in section 4116 of the bill.

Government stake. Section 4117 of the bill states “The Secretary may receive warrants, options, preferred stock, debt securities, notes, or other financial instruments issued by recipients of financial assistance under this subtitle which, in the sole determination of the Secretary, provide appropriate compensation to the Federal Government for the provision of the financial assistance.”

Maintaining service. The bill grant authority to the Secretary of Transportation, as she deems necessary through March 1, 2022, to require air carriers, “to the extent reasonable and practicable,” to “maintain scheduled air transportation service…to ensure services to any point served by that air carrier before March 1, 2020.”

In making these determinations, the Secretary is required to “take into consideration the air transportation needs of small and remote communities and the need to maintain well-functioning health care supply chains, including medical devices and supplies, and pharmaceutical supply chains.”

Share

Related Articles

T&I Aviation Hearing Explores Air Rage Incidents

T&I Aviation Hearing Explores Air Rage Incidents

Unruly passenger incidents are not new to aviation, but the rates of verbal disputes, threats, and sometimes physical altercations with...

Biden Signs Sweeping Market Competition/Concentration Order

Biden Signs Sweeping Market Competition/Concentration Order

On July 9, President Biden signed one of the widest-ranging executive orders of his Administration, EO 14036, "Promoting Competition in the...

Modernizing Airports and Air Traffic Control Facilities Among Top Priorities in Aviation Infrastructure Funding

Modernizing Airports and Air Traffic Control Facilities Among Top Priorities in Aviation Infrastructure Funding

The Subcommittee on Aviation Safety, Operations, and Innovation of the Senate Committee on Commerce, Science and Transportation held a...

Guest Op-Ed: Action and Reaction: The Belarus Gambit to Force Diversion of Ryanair Flight 4978

Guest Op-Ed: Action and Reaction: The Belarus Gambit to Force Diversion of Ryanair Flight 4978

Before the end of World War II, the United States government brought representatives of nations from around the world to Chicago to hammer...

Op-Ed: Opening Up Global Air Travel—Safely

Op-Ed: Opening Up Global Air Travel—Safely

One of the indelible effects of the COVID-19 outbreak is the dramatic decrease in air travel. Now that parts of the world are starting to...

State of the Aviation Industry Hearing

State of the Aviation Industry Hearing

In a hearing on April 21, the Senate Subcommittee on Aviation, Safety, Operations, and Innovation assessed the state of the aviation...

Airlines, public transit agencies say $1.9 trillion relief plan would prevent deep cuts, job losses

Airlines, public transit agencies say $1.9 trillion relief plan would prevent deep cuts, job losses

Jeff Davis discusses industry survival measures while reviewing funding aspects of the latest coronavirus relief package.  

More Airline Aid Now Won't Move Without Resolution of Larger COVID Aid Bill

More Airline Aid Now Won't Move Without Resolution of Larger COVID Aid Bill

This was an interesting week for the aviation news beat in Congress. The end result is that many U.S. airlines and contractors are...

Additional Airline Payroll Support Promised But Not (Yet) Delivered

Additional Airline Payroll Support Promised But Not (Yet) Delivered

U.S. airlines commenced plans to lay off over 30,000 employees yesterday, following the expiration of the no-layoffs clause accompanying...

Airlines Close on $13 Billion in CARES Act Loans

Airlines Close on $13 Billion in CARES Act Loans

The Treasury Department announced this week that seven passenger airlines had closed loans under the authority provided in the March 2020...

Plan for Contact Tracing Air Travelers Stalls

Plan for Contact Tracing Air Travelers Stalls

Last week, news outlets reported that the White House put the brakes on a plan by the Centers for Disease Control (CDC) to require airlines...

Airports, Some Transit Agencies Slow to Spend COVID Relief Money

Airports, Some Transit Agencies Slow to Spend COVID Relief Money

New data from the federal government shows that not all airports and transit agencies needed the federal coronavirus aid provided by the...

Be Part of the Conversation
Sign up to receive news, events, publications, and course notifications.
No thanks