JetBlue Airways (JBLU) on Thursday defended itself against accusations from a group of Democratic senators who called out the air carrier for cutting wages and hours, which they contend is a violation of terms laid out in coronavirus rescue funding.
More than a dozen Senate Democrats — including former presidential contenders Elizabeth Warren, Kamala Harris and Bernie Sanders — released on Wednesday a letter to JetBlue that accused the company of illegally cutting employee compensation. The senators have leveled similar accusations at Delta Air Lines (DAL).
“The CARES Act is clear that, as a condition of receiving this assistance, your company must refrain from conducting involuntary furloughs or reducing pay rates and benefits until September 30, 2020,” the senators wrote.
“Your decision to cut employee hours is inconsistent with congressional intent and is a blatant and potentially illegal effort to skirt your requirements to keep workers on payroll, and you should reverse this policy immediately,” the letter added.
However, in a JetBlue statement emailed to Yahoo Finance, the discount air carrier said its use of the funds is consistent with the intent of the law.
“Given that our flights in many cities are completely suspended and are significantly reduced in others, there are quite literally no hours for our crew members to work in many cases,” the company said.
According to JetBlue, demand for air travel had contracted to 10-15% of its full schedule, and the payroll support funds it is allocated under the Act covers approximately 76% of its employee costs.
“With little new cash revenue coming into JetBlue, we need to make payroll support funds last until September 30 so that going into October we can preserve as many jobs as possible, which is consistent with the intent of the CARES Act,” the statement said.
However, the Democrats pushed back on JetBlue’s interpretation. “A spokesperson from your company has stated that these reductions in hours comply with the CARES Act. This view is impossible to reconcile with the clear intent of the law,” the lawmakers wrote.
Still, JetBlue maintains that it is in full compliance with the conditions attached to the federal assistance by allocating the money using a standard for minimum guaranteed hours consistent with union agreements.
It added that none of its programs aim to reduce full-time crew members to part-time status, and that health and retirement benefits had been maintained for crew members still working, and those staying home because there are no customers to serve.
The lawmakers demanded that JetBlue answer a series of questions by June 3, including whether the company consulted with the Treasury Department or workers’ unions before adopting its current policies, and how it intends to modify its labor policies to comply with the Act.
Yahoo Finance requested a response from Delta Air Lines, which did not immediately respond.
On May 6, United Airlines (UAL) reversed a decision to reduce worker hours after a union representing more than 25,000 of its workers filed a lawsuit against the company, alleging that in doing so it had violated the act.
