Airline contractors laid off workers even as they received millions in federal aid, lawmakers say
At least a dozen airline contractors received taxpayer-funded stimulus money designed to preserve jobs despite laying off thousands of workers.
Lawmakers are launching an investigation into whether at least a dozen airline contractors received taxpayer-funded stimulus money designed to preserve jobs despite laying off thousands of workers.
A report published by the House Select Subcommittee on the coronavirus pandemic found that at least $728 million in payroll support assistance went to 12 contractors that had laid off a total of 9,300 employees.
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On Wednesday, lawmakers sent letters to four of the companies -- Flying Food Fare, Gate Gourmet, Swissport and G2 Secure Staff -- that had received some of the biggest loans. Combined, the four companies received $507 million in government aid after they laid off a collective 7,500 workers.
Flying Food Fare, Gate Gourmet and Swissport provide catering services to airlines. G2 Secure Staff provides services like baggage handling and pre-departure screening services to airports, according to its website.
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“Congress created this program to ‘preserve aviation jobs’ by providing wage assistance to companies in exchange for keeping workers on the payroll,” the lawmakers wrote. “Despite Congress’ clear intent, Treasury is providing hundreds of millions of taxpayer dollars to at least twelve airline industry contractors that recently laid off thousands of workers."
They said the companies circumvented the law by letting workers go before signing agreements with the Treasury Department to receive funds in amounts based on last year's employment levels.
"Because the amount of assistance awarded to each company was calculated based on 2019 payroll figures, the Treasury Department appears to be distributing taxpayer funds to help preserve jobs that have already been eliminated," a release from the lawmakers said.
In a statement to FOX Business, Swissport said it was "grateful" for the aid and said the money has been used for the "continuation of payments of wages, salaries, and benefits to the employees."
"Swissport believes it is currently fully-compliant with the terms of the PSP Agreement entered into with U.S. Treasury and will remain so throughout the term of the PSP Agreement," the company said.
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Gate Gourmet, meanwhile, said in a statement that layoffs and furloughs were "necessary during this unprecedented time."
"While never an easy decision, this has been done in accordance with our collective bargaining agreements," the company said. "We are committed to complying with all our obligations and will use all CARES Act funds exclusively for the continuation of payment of employee wages, salaries, and benefits."
G2 Secure Staff and Flying Food Fare did not respond to requests for comment.
Treasury officials said they implemented the CARES Act "as written."
“The Payroll Support Program is supporting hundreds of thousands of aviation industry jobs, keeping workers employed and connected to their healthcare, and has played a critical role in stabilizing and preserving the U.S. airline industry,” officials said.
The letters, signed by Reps. James Clyburn, D-S.C., Peter DeFazio, D-Ore., Maxine Waters, D-Calif., called on the companies to either re-hire the laid-off employees or return the stimulus money.
Under the $2.2 trillion CARES Act signed into law at the end of March, $3 billion was allocated to airline contractors, including those who employ caterers and airport workers, to maintain payroll and avoid mass layoffs through September.