Democratic lawmakers ask for IG investigation into how airlines used COVID relief funding

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Democratic lawmakers are asking the U.S. Treasury Department to launch a federal investigation into how airlines used federal COVID funding from 2020. 

In a letter to the deputy inspector general of the department, Reps. Carolyn Maloney and James Clyburn requested a review, including whether any of the money was used for buyouts or staff reductions.

"We are concerned that some airlines have used federal funds obtained during the pandemic to provide buyouts and early retirement packages for pilots, which may be exacerbating a shortage of commercial pilots," the pair wrote. "As a result of pilot shortages, thousands of flights have been delayed or canceled, wreaking havoc on travel plans for millions of American taxpayers." 

Maloney and Clyburn noted that more than $60 billion in taxpayer money was disbursed through the CARES Act of 2020 and the American Rescue Plan Act of 2021.

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Chairwoman Carolyn Maloney speaks during a House Oversight and Government Reform Committee hearing, Oct. 7, 2021.  (Bill Clark/Pool via REUTERS / Reuters Photos)

Under the CARE Act Payroll Support Program, they said, Congress had intended funding for the airlines to "preserve aviation jobs and compensate air carrier industry workers" and that, as a condition of accepting the money, air carriers were prohibited from conducting involuntary furloughs or reducing pay rates and employee benefits. 

TickerSecurityLastChangeChange %
AALAMERICAN AIRLINES GROUP INC.14.19+0.23+1.65%
DALDELTA AIR LINES INC.32.66+0.55+1.71%
UALUNITED AIRLINES HOLDINGS INC.39.26+0.38+0.98%
LUVSOUTHWEST AIRLINES CO.38.40+0.75+1.99%

"After receiving significant federal funding through these relief efforts, three of the leading U.S. airlines each cut a substantial share of their workforce and urged employees to take early retirement, contrary to the intent of the CARES Act and American Rescue Plan Act," they wrote, adding that early retirement programs piled on an existing pilot shortage. 

Read the letter:

By law, pilots must retire at age 65, and around one-third of pilots are between 51-59; 13% of pilots will turn 65 in the next five years. 

United Airlines and American Airlines planes sit on the tarmac as snow begins to fall at Ronald Reagan National Airport in Arlington, Va., Jan. 16, 2022. (Samuel Corum/Bloomberg via Getty Images / Getty Images)

Citing projections from the Bureau of Labor Statistics, they said there will be about 14,500 openings for airline and commercial pilots each year over the next decade. 

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Maloney and Clyburn said that while travelers are suffering the consequences of the pilot shortage, airline companies have benefited from record high revenues. 

"American taxpayers supported the airline industry during its darkest days at the start of the coronavirus pandemic, when nearly 75% of commercial flights were grounded," they added. "Americans deserve transparency into how airlines have used the federal funds they have received."

They also cited an audit from the Treasury’s Office of Inspector General that found multiple airlines had "pervasive issues" with payroll calculations submitted to Treasury in 2021, impacting the "accuracy of recipient award amounts" they received under the CARES Act. 

Majority Whip James E. Clyburn addresses the media during a press conference Aug. 15, 2022.  (Tracy Glantz/The State/Tribune News Service via Getty Images / Getty Images)

Additionally, in 2020, the Select Subcommittee on the Coronavirus Crisis, which Clyburn chairs, issued a staff report that found the Treasury under the Trump administration allowed aviation contractors to lay off thousands of workers while still receiving full payroll support based on pre-pandemic workforce numbers. 

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"This, coupled with the glaring issues in airlines’ payroll calculations that Treasury OIG discovered, warrants an evaluation of the Treasury’s disbursement of funding to airlines," the letter stated. "The Committees request that you complete a thorough review of the federal funding Treasury has disbursed to airlines to sustain their operations during the coronavirus pandemic, including an accounting for how the funds were disbursed and used by each airline recipient and whether any funds were used for buyouts or staff reductions."

The pair requested an evaluation by Sept. 22. 

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