Clyburn Secures Commitment from Aviation Contractors To Preserve Over 30,000 Jobs

Washington, D.C. (October 21, 2020) -- In response to requests from Chairman James E. Clyburn, four companies that collectively received $595 million in Payroll Support Program (PSP) funds have committed to retain all current employees until after they have exhausted remaining program funds.These four companies—Menzies Aviation, DAL Global Services, LLC, Sky Chefs, Inc., and Worldwide Flight Services—employ a total of more than 30,000 Americans.

These commitments follow a Select Subcommittee staff report revealing that the Treasury Department allowed aviation contractors to fire thousands of workers while still receiving and spending hundreds of millions of taxpayer dollars intended to protect those workers' jobs. On October 9, 2020, Chairman Clyburn sent letters to several aviation contractors to demand that they halt further layoffs until they have spent all the funds they received.

"Congress created the Payroll Support Program to preserve aviation jobs, but the Trump Administration has let companies fire thousands of employees and still receive program funds. I am pleased that following my request, several companies have agreed to halt further layoffs and furloughs until all of the PSP funds awarded to them have been spent," Chairman Clyburn stated. "I urge other PSP recipients to take the same pledge to preserve jobs while spending taxpayer dollars. The Select Subcommittee will continue to demand that relief funds only be used in a manner consistent with congressional intent."

Congress created the Payroll Support Program to "preserve aviation jobs" by providing payroll assistance to companies in exchange for keeping workers employed. Following Chairman Clyburn's requests, four companies agreed to halt further layoffs until those funds were expended.

One of these companies, Menzies Aviation, noted in response to the Chairman's letter that the company "shares your letter's view regarding the spirit and intent of PSP funds and the concern for circumvention of the Program's commitments tied to receipt of such funds."

The Select Subcommittee's October 9, 2020, staff report showed that Treasury's implementation of the PSP undermined the Program's effectiveness by permitting aviation contractors to lay off thousands of workers and still receive full payroll support funds calculated on pre-pandemic workforce figures. The report demonstrated that Treasury delayed execution of PSP agreements for months and permitted layoffs while the agreements were pending. Treasury also allowed companies to spend PSP funds indefinitely, even after the prohibition on layoffs ended on September 30, removing any incentive to maintain payroll levels above business demands. As a result, some contractors will have PSP funds to spend on a reduced workforce well into 2021.

Three other companies that received PSP funds following significant layoffs rejected Chairman Clyburn's request to refrain from further layoffs until these funds have been exhausted:

• Swissport USA, Inc.laid off and involuntarily furloughed 3,873 workers between April 3 and July 10, when it executed its PSP agreement. Although Swissport received over $170 million in PSP funds, it did not hire back a single worker based on the receipt of those taxpayer dollars. Swissport plans to continue spending PSP funds until March 2021.

• Flying Food Fare Inc. laid off 1,516 employees and furloughed 1,521 employees between the time it submitted its PSP application and when it executed its agreement with Treasury. The company received over $85 million under the PSP but did not hire back any workers based on the receipt of those funds. Flying Food Fare plans to continue spending its PSP funds into the second quarter of 2021, but expects to lay off at least 125 more employees in the next six months.

• Gate Gourmet laid off 5,040 employees between April and the execution of its PSP agreement in June. Gate Gourmet received over $171 million in PSP support and does not anticipate exhausting those funds until March or April 2021.

The Select Subcommittee, along with the Committee on Transportation and Infrastructure and the Committee on Financial Services, launched an investigation into Treasury's implementation of the PSP on July 29, 2020, with letters seeking documents and information from Treasury and four aviation contractors.

On October 1, 2020, House Democrats passed the updated Heroes Act, which would provide additional payroll support for the aviation industry as part of a broader, comprehensive response to the coronavirus pandemic.

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