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Lawmakers want airfreight handler to return $170 million in COVID-19 funds

Mass layoffs at Swissport USA prompted clawback

Lawmakers want answers from Swissport by Aug. 5. (Photo: Swissport International Ltd.)

Air cargo contractor Swissport USA, which has operations in 16 of the busiest U.S. airports, faces questions from lawmakers for accepting $170.4 million in federal relief funds after laying off thousands of workers.

In a July 29 letter to U.S. Treasury Secretary Steven Mnuchin, three committee leaders in the U.S. House of Representatives contended that the Payroll Support Program (PSP) was intended to save jobs affected by the coronavirus pandemic, “not provide a corporate bailout.”

Under the CARES Act, they explained, PSP funds were to be used exclusively to pay employee wages, salaries and benefits. “To receive these funds, recipients must refrain from conducting involuntary furloughs or reducing pay rates and benefits until September 30, 2020.”

Swissport USA was one of 12 airline industry contractors receiving a share of over $728 million in PSP funding. “Yet according to media reports and state agency disclosures, these companies laid off thousands of workers before signing Payroll Support Program agreements with the Treasury Department,” asserted James Clyburn, D-South Carolina, Peter DeFazio, D-Oregon, and Maxine Waters, D-California, in the letter.

In a separate letter sent to Swissport USA CEO Frank Mena, the lawmakers stated that the $170 million the company agreed to receive in payroll support was the second-highest award given to any aviation contractor.

“Yet in the weeks prior to executing that agreement, Swissport announced layoffs of at least 2,840 workers in Florida, Michigan, New York, Virginia, and Washington,” they stated. “Swissport’s receipt of payroll assistance for jobs that no longer exist is contrary to Congress’ intent in creating the Payroll Support Program.”

Airline contractors known to have accepted federal payroll funding following layoffs
Source: U.S House of Representatives, media reports

The lawmakers want Mena to inform them by Wednesday whether his company will be rehiring the workers it laid off during the pandemic or returning the PSP money. If Swissport does not plan to rehire its workers or return the money, the lawmakers asked Mena for a list of documents “to assist us in examining why your company received these funds and how these funds will be used.”

Those documents include all notices provided to any government agency related to layoffs or furloughs since March 1, 2020, and all communications and documents related to the company’s PSP application.

Swissport USA contends it is fully compliant with the terms of the PSP agreement and will remain so. “In response to the pandemic, and with no assurance Swissport USA would receive relief through the Payroll Support Program, Swissport USA worked to responsibly manage its business to ensure its continuing viability,” the company asserted in a response statement to FreightWaves.

“The Payroll Support awarded by U.S. Treasury to Swissport has been, and will be, used exclusively for the continuation of payment of wages, salaries, and benefits to the employees of Swissport from the date of the PSP Agreement. We look forward to working cooperatively with the relevant committees through the appropriate channels to address their questions.”

Under the terms of the PSP Agreement, $111.9 million of the $170.2 million was to take the form of a grant, with $58.5 million in an unsecured, non-amortizing 10-year promissory note. The first installment of $85.2 million was received on July 10, and further installments were expected by the end of July and the end of August, according to the company.

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One Comment

  1. John D

    Same at the DFW MSP IAH LAX and other locations, many Swissport employees laid off. Most have yet to comeback. So where is the money?

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John Gallagher

Based in Washington, D.C., John specializes in regulation and legislation affecting all sectors of freight transportation. He has covered rail, trucking and maritime issues since 1993 for a variety of publications based in the U.S. and the U.K. John began business reporting in 1993 at Broadcasting & Cable Magazine. He graduated from Florida State University majoring in English and business.