Tag Archives: Bailout

Top U.S. airlines starting 32,000 furloughs as bailout hopes fade

By Tracy Rucinski and David Shepardson

CHICAGO/WASHINGTON (Reuters) – American Airlines and United Airlines, two of the largest U.S. carriers, said they were beginning furloughs of over 32,000 workers on Thursday as hopes faded for a last-minute bailout from Washington.

Both airlines told employees, however, in memos seen by Reuters on Wednesday that they stood ready to reverse the furloughs, which affect about 13% of their workforces before the pandemic, if a deal was reached.

Tens of thousands of other employees at those airlines and others including Delta Air Lines and Southwest Airlines have accepted buyouts or leaves of absence aimed at reducing headcount as carriers battle a health crisis that has upended the global travel industry.

U.S. airlines have been pleading for another $25 billion in payroll support to protect jobs for a further six months once the current package, which banned furloughs, expires at midnight EDT.

Earlier, U.S. Treasury Secretary Steven Mnuchin said talks with House of Representatives Speaker Nancy Pelosi had made progress on a bipartisan aid plan, although no deal was reached and Senate Majority Leader Mitch McConnell called a $2.2 trillion coronavirus relief proposal “outlandish.”

In a memo to employees, American Chief Executive Doug Parker said Mnuchin told him that he and Pelosi were continuing to negotiate on a bipartisan COVID-19 relief package that would include an extension of aid for airlines and could reach an agreement in coming days.

“Unfortunately, there is no guarantee that any of these efforts will come to fruition,” Parker said.

American will furlough 19,000 employees, including some 1,600 pilots. More than 13,000 United employees will be on furlough, but not any pilots following an agreement reached this week.

“Tomorrow, tens of thousands of essential aviation workers will wake up without a job or healthcare and tens of thousands more will be without a paycheck,” Association of Flight Attendants-CWA President Sara Nelson said in a statement that urged lawmakers to reach a deal.

Nick Calio, who heads the airline trade group Airlines for America, said earlier that the industry was still pursuing all potential avenues for new assistance as time runs short.

“People keep talking, but we need results,” Calio told Reuters. “We are hopeful but not confident about them reaching a deal on a larger bill.”

U.S. airline shares ended flat on Wednesday.

Weeks of intense airline lobbying has won over many but not all Washington lawmakers, while drawing attention to the plight of other pandemic-hit industries as the crisis persists.

U.S. airlines are operating about half their 2019 flying schedules and suffering a 68% decline in passenger volumes.

The impact of the coronavirus on travel may cost as many as 46 million jobs globally, according to projections published on Wednesday by the Air Transport Action Group.

Airlines have argued they need trained employees to help drive an economic recovery as the pandemic subsides. American Airlines’ Parker told CNN he believed one more round of aid would be sufficient.

(Reporting by Tracy Rucinski and David Shepardson; Editing by Peter Henderson and Peter Cooney)

U.S. passenger railroad Amtrak to furlough 2,000 workers

By David Shepardson

WASHINGTON (Reuters) – U.S. passenger railroad Amtrak will furlough more than 2,000 workers as a result of the steep decline in travel demand from the coronavirus pandemic.

Amtrak said in a statement that despite other cuts, “significant reductions remain necessary due to the slow recovery of ridership and revenue. Approximately 1,950 agreement team members will be furloughed” and 100 management jobs will be cut in the coming weeks.

In May, Amtrak said it needed a new $1.475 billion bailout and disclosed plans to cut its workforce by up to 20% in the coming budget year.

The company, which has been hit hard by the coronavirus pandemic, received $1 billion in emergency funding from Congress in April. Amtrak, a government-owned corporation that gets annual subsidies from Congress, has said previously it employs about 20,000 workers.

Ridership and revenue levels are down 95% year over year since the pandemic began, Amtrak has said.

U.S. House of Representatives Transportation Committee Chairman Peter DeFazio said the committee’s panel overseeing rail issues would hold a hearing on Sept. 9 with Amtrak Chief Executive Bill Flynn.

“It’s time for Republicans in the Senate to stop sitting on these important bills and do their job to protect Amtrak employees and so many others currently in need,” DeFazio, a Democrat, said.

Much of the U.S. transportation sector has been battered by COVID-19.

Transit agencies are urging Congress to approve $32 billion to $36 billion on top of a $25 billion bailout approved by Congress in March. Urban transit systems have been devastated by millions of workers staying home rather than commuting and a sharp decline in tourism.

Private U.S. bus companies are seeking $15 billion in government assistance.

U.S. airports want another $10 billion in government assistance on top of an earlier $10 billion bailout, while passenger airlines want a further $25 billion in payroll assistance.

United Airlines said on Wednesday it planned to cut 16,370 jobs as early as Oct. 1 without new government assistance.

(Reporting by David Shepardson; Editing by Peter Cooney)

No clear path for California as massive PG&E utility nears bankruptcy

FILE PHOTO: PG&E works on power lines to repair damage caused by the Camp Fire in Paradise, California, U.S. November 21, 2018. REUTERS/Elijah Nouvelage/File Photo

By Sharon Bernstein

SACRAMENTO, Calif. (Reuters) – PG&E Corp’s announcement that it will file for bankruptcy, citing massive potential liability from deadly wildfires, puts California politicians in quandary, whether to offer a bailout or risk allowing the state’s largest private utility to fail.

Governor Gavin Newsom, a Democrat, told reporters late on Monday his team was discussing the possibility of helping PG&E stay solvent, but no decisions had been made.

And lawmakers in the state legislature, who last year approved a bill making it easier for PG&E to bill ratepayers for the costs of wildfires sparked by its equipment in 2017, said that there was less support this year for extending additional financial assistance to the company.

“We would like to see it (bankruptcy) avoided, but we are not naive,” Newsom said. “I’m cognizant of the taxpayers, and I’m cognizant of the ratepayers, and I’m absolutely cognizant of those who lost everything.”

FILE PHOTO: Forensic anthropologists recover remains from a trailer home destroyed by the Camp Fire in Paradise, California, U.S., November 17, 2018. REUTERS/Terray Sylvester/File Photo

FILE PHOTO: Forensic anthropologists recover remains from a trailer home destroyed by the Camp Fire in Paradise, California, U.S., November 17, 2018. REUTERS/Terray Sylvester/File Photo

PG&E’s announcement on Monday that it intends to file for Chapter 11 bankruptcy protection as early as this month, citing potential liability exceeding $30 billion due to wildfires, came a day after its chief executive officer, Geisha Williams, was ousted from her post.

PG&E, which ranks as the largest U.S. power utility by the number of customers, supplies electricity to 40 percent of Californians. The state, Newsom said, is determined to keep service running to those customers.

But the utility’s power equipment has been linked to the ignition of more than a dozen wildfires in the past two years and is a suspected cause of the deadliest fire in state history, which swept through the town of Paradise in November, killing 86 people and destroying 90 percent of homes and businesses there.

Mark Toney, executive director of consumer advocate group the Utility Reform Network, said the atmosphere had cooled considerably toward PG&E in recent months, making a bailout politically more difficult for lawmakers.

“PG&E is going to have a much harder time because it doesn’t appear that they’ve learned any lessons,” Toney said.

FILE PHOTO: Statues are seen on a property damaged by the Camp Fire in Paradise, California, U.S. November 21, 2018. REUTERS/Elijah Nouvelage/File Photo

FILE PHOTO: Statues are seen on a property damaged by the Camp Fire in Paradise, California, U.S. November 21, 2018. REUTERS/Elijah Nouvelage/File Photo

MIXED SIGNALS

The legislature and the governor could decide to allow PG&E to pass along the costs associated with victim lawsuits and other fire losses to ratepayers, as they did last year for a series of deadly northern California blazes in 2017.

Such legislation would also let utilities shift some future fire-related costs to consumers so long as regulators find no negligence on the companies’ part.

But state lawmakers have given mixed signals about what they might do about liability stemming from the deadly Camp Fire of November 2018 that incinerated most of Paradise.

Legislators representing areas devastated by wildfires have opposed any bailout for PG&E, saying its investors should absorb the costs – even if that means the company is bankrupted.

PG&E’s safety record has come under sharp scrutiny before.

State Senator Jerry Hill, whose district includes the site of the deadly 2010 San Bruno gas pipeline explosion determined to have been caused by PG&E’s criminal negligence said support for the utility was softer this year.

“I think there’s less chance, less thought of a bailout this year than we saw last year, certainly,” said Hill, who has the names of the nine people killed in the San Bruno blast framed in his office.

(Reporting by Sharon Bernstein in Sacramento, Calif.; Editing by Steve Gorman and Clarence Fernandez)

Greece Must Implement Terms of EU Bailout Quickly

Newly re-elected, left wing Prime Minister of Greece, Alexis Tsipras announced that Greece must “quickly implement” the terms of the EU bailout agreed upon in July. During  his first Cabinet meeting, Tsipras stressed that his aim is to have steered the country out of its crisis by 2019 when his four-year mandate ends.

“We are aware of the difficult points of the deal… we know how to find the right antidote where there are side effects,” Tsipras said today. “This mandate is translated into one word; work.”

A review by the lenders will be conducted in late October to determine if the reform program has been implemented.   

Tsipras highlighted another crisis for his country, saying that  the government’s task was made into an even greater challenge by Europe’s migrant flows.

Greece has become the main point of entry into Europe for those fleeing war and poverty in the Syria and war torn Africa, most of whom then head by land to richer EU countries further north.

Greece Passes Austerity Measures

The Greek parliament overwhelmingly passed austerity measures that are extremely unpopular with the Greek citizens by a vote of 229 to 64.

The measures approved by the Parliament include raising taxes and cutting pensions.  The measure passed because of the votes of the opposition parties as the prime minister’s ruling Syriza party mostly voted against the measure.

Syriza had ran for parliament on a platform of not accepting any more austerity measures.  Party Speaker Zoe Constantopoulou said the deal was “social genocide.”

Prime Minister Alexis Tsipras said the deal was the best he could get from the European Union and the country’s creditors.

The vote brought immediate action from the European Central Bank (ECB) which increased emergency funding for Greek banks by 900 million Euro for one week.

ECB President Mario Draghi said the bank’s total exposure to Greece totals 130 billion Euro.

“It’s uncontroversial that debt relief is necessary and I think that nobody has ever disputed that,” Mr Draghi told the BBC.  “The issue is what is the best form of debt relief within our framework, within our legal institutional framework. I think we should focus on this point in the coming weeks.”

Greek Finance Minister Resigns Ahead of Bailout Vote

Greece’s Finance Minister, Nadia Valavani, has resigned her position after telling Prime Minister Alexis Tsipras that she couldn’t support the bailout measures.

“Alexis, I am ready to serve in any capacity to the end during challenges. However, when our delegation returned with liabilities that are ‘stillborn measures’ and at such a price [by the creditors in fulfilling the reforms program], once again when the dilemma appears of retreating or Grexit, it will be impossible for me to remain a member of the government,” reads Valavani’s letter of resignation.

This ‘capitulation’ is so overwhelming that it will not allow a regrouping of forces. With your signature there will be a deterioration in the status of an already suffering population, and this will be a tombstone around their necks for many years with little potential of redemption,” she wrote.

Valavani was in charge of taxation and overseeing privatization in the nation.

The International Monetary Fund (IMF) expanded on initial criticisms offered Tuesday of the deal between Tsipras and EU officials, saying that Greece’s debts now exceed $300 billion and that creditors will have to write off some of the debt if there is any hope of Greece repaying what it owes.

The European Commission has been critical of giving more money to Greece than what is already being offered.

“Greece has already received more international financing than all of Europe did from the U.S. Marshall Plan after the Second World War,” Commission President Jean-Claude Juncker said.

Greece’s energy minister, Panagiotis Lafazanis, said Wednesday that even if the deal passes the Parliament, the country’s people will never accept it and unite against it.

Germany Wants To “Tax The Rich” To Pay For Bailouts

Germany is preparing a proposal for new rules regarding European Union bailouts that would impose a tax on property.

The move would be aimed at “taxing the rich” to pay for the bailouts in a way that would keep wealthy landowners from moving money to other countries. German officials say that the problem with requiring bailouts to take funds from bank accounts is that wealthy account holders can transfer money out of the country before restrictions take effect. Continue reading →

Portugal At Risk For Second EU Bailout

Portugal’s prime minister is warning that unless deep cuts are made to social security, health, education and public programs the nation could be facing a second bailout from the European Union.

Prime Minister Pedro Passos Coelho said the country is facing a “national emergency” and that because the Portuguese Constitutional Court struck down 1 billion euros in savings that were required to meet existing bailout conditions there was no choice but to cut in areas like welfare. Continue reading →