At least 202 aviation companies double-dipped into federal programs designed to prop up struggling businesses during the coronavirus pandemic, according to a Washington Post review of federal data.
The companies include a Chicago catering firm under investigation by Democrats in Congress for laying off almost 900 workers this spring; an Ohio aircraft maintenance business that closed an office and put dozens of people out of work just days after securing a loan of at least $5 million under one of the programs; and a Wisconsin airline that has warned of hundreds of temporary layoffs in the fall.
Earlier this month, the office of the new Special Inspector General for Pandemic Recovery, a government watchdog, questioned the practice of letting companies benefit from both programs, saying it "was not obvious" why airlines in particular would need help twice and adding that it planned to monitor the issue.
"Creating multiple programs resulting in multiple forms of financial support to a single individual or entity may well be sound policy," the inspector general's office wrote. "But in such circumstances, the risk of fraud and abuse increases and questions arise."
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In March, Congress created the Paycheck Protection Program, which provided forgivable loans to small businesses of all kinds. But lawmakers also singled out the aviation industry for special help through a system of grants known as the Payroll Support Program.
The companies are in line for $700 million under the aviation program, receiving grants based on their payroll for a six-month period last year. The loans in the small-business program are worth at least $186 million.
The programs have drawn scrutiny from watchdogs both inside and outside government, focusing on which companies received the money and whether the dollars are getting to those who need it most. Money from the small-business program went to chains backed by private equity firms and to members of Congress. The aviation program, meanwhile, is on the verge of expiring before the industry recovers, putting tens of thousands of jobs on the line.
'BACK END' SCRUTINY
Rosalind Wiggins, director of Yale's Global Financial Crisis Project, said policymakers have been faced with the balance of getting money into the economy quickly and fine-tuning program rules.
"When you have this much money going out with this much speed, there are bound to be issues like this that arise that will be evaluated on the back end," Wiggins said.
The Post compared records disclosed by the Small Business Administration and the Treasury Department to determine whether companies had benefited from both programs. It is not possible to determine the precise value of the small-business loans because the Small Business Administration released only loan-amount ranges.
There also could be more companies that benefited because the aviation industry records do not list street addresses for recipients, which would help determine whether different legal entities that are in fact the same business have received money, and because the small-business agency released records only on companies receiving loans of at least $150,000.
LOANS, THEN LAYOFFS
Constant Aviation, an aircraft services company based in Cleveland, quickly secured a loan under the small-business program, getting approved for at least $5 million on April 14, according to the agency records.
But on April 24, the company wrote to officials in Ohio saying it would be closing an office at the Cuyahoga County airport and permanently laying off about 52 employees.
"This facility closure and the resulting layoffs are a necessary response to the unprecedented and unforeseeable business circumstances created by the covid-19 pandemic," Constant CEO David Davies wrote.
Companies are supposed to give workers at least 60 days' notice of such layoffs, but Davies wrote that Constant was unable to do so, "due to the sudden nature of the virus outbreak and its dramatic adverse effect on our business operations."
John Price, a manager on the company's avionics team, led a tight-knit group of 10 people that he said was like a family.
The news that he was losing his job came out of nowhere, he said. He remembered getting a call on a Friday afternoon letting him know what was happening.
"There was no warning signs that led up to it," Price said. "We'd come out of a pretty bad year, and we were starting to turn things around at the facility I was at."
The layoffs took effect in early May.
'DESTROYED A FAMILY'
Many of those who lost their jobs have yet to find new work. Price took a position with another company at a 25% pay cut and had to move in with his brother in Illinois to be close enough to commute, leaving his wife back in Ohio.
On May 22, Constant was approved for $23 million in aid under the aviation grant program, an approval that prohibited the company from laying off or furloughing any workers until Oct. 1.
Price said the details of the financial aid the company received were kept from employees like him.
"It makes me feel like for a company that asked us for our loyalty, they had none to give back," he said. "To find out they received that kind of money and still threw us out, it kind of blows my mind. To be quite blunt, it p*es me off to know I could have had my job kept and saved and still be at home with my wife."
"They destroyed a family," Price said. "Not just a bunch of co-workers."
Constant, in a statement, said the company had "once again reviewed its guidelines and determined that all layoffs were done in advance of the availability of its PSP [Payroll Support Program] grant, and in accordance with the PPP program [Paycheck Protection Program]."