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Aviation Manufacturers and Suppliers Will Receive $3 Billion in Payroll Support Under ARP

  • Aviation Manufacturing Jobs Protection program established under American Rescue Plan provides $3 billion to help aviation companies retain and rehire workers
  • Program will provide a 50 percent match to help qualifying companies maintain compensation
  • More than 1,000 aerospace companies are located in Connecticut

Summary by Dirk Langeveld

Companies involved in aviation manufacturing, including those supplying parts, systems, or components for aircraft, will be eligible for targeted payroll assistance under the American Rescue Plan.

The Aviation Manufacturing Jobs Protection program will provide $3 billion in grant funding to help aviation companies to retain workers or rehire employees who lost their jobs during the COVID-19 pandemic. The program will be administered by the Department of Transportation.

The legislation specifies that eligible companies, namely those that involuntarily laid off at least 10 percent of their workforce or suffered annual revenue losses of at least 15 percent in 2020, can receive funding to supplement the compensation of eligible employee groups. These groups must not exceed 25 percent of the employer’s total workforce as of April 1, 2020; not have any employees earning more than $200,000 a year; and be engaged in activities or services related to aviation manufacturing, repair, or maintenance.

Employers provide a 50 percent matching contribution, with the remainder covered through the program. The funds will assist with compensation for no longer than six months and help employers provide salaries and benefits to eligible employee groups to maintain compensation levels as of April 1, 2020.

The total compensation figure excludes overtime and premium pay, as well as payroll taxes. While the program aims to encourage employers to rehire workers who were laid off, it can not be used to provide back pay.

Employers are ineligible if they are currently making expenditures using Paycheck Protection Program loans, or if they received payroll tax credits of funding through the air carrier payroll support program under last year’s CARES Act. Employers also become ineligible if they conduct involuntary furloughs affecting the eligible employee group, outside of normal disciplinary action or terminations in accordance with company policy, or cut pay or benefits for the group between their application and when they enter into an agreement with the Secretary of Transportation.

The COVID-19 pandemic has created major disruptions in the aviation industry, as the sharp downturn in air travel led to a corresponding decline in demand for aircraft products and services. The industry had already experienced a recent shock due to the suspension of the Boeing 737 Max program following two deadly crashes that grounded the aircraft for 20 months.

Rep. Rick Larsen of Washington State, who helped craft language assisting the aviation and aerospace industry in the American Rescue Plan, said an estimated 100,000 aerospace workers lost their jobs during the pandemic. He said another 220,000 would be at risk of unemployment if further assistance was not provided.

The aerospace industry plays a key role in the Connecticut economy, with more than 1,000 aerospace manufacturers and components firms located in the state. Major aviation companies headquartered in Connecticut include Pratt & Whitney, Sikorsky, and Kaman.

Previous programs set up to support payrolls in the aviation industry were administered by the Treasury Department. The Department of Transportation will need to establish internal protocols and infrastructure to support the Aviation Manufacturing Jobs Protection program before funding is available. However, interested parties can begin organizing financial documentation and other information to claim eligibility once the program opens.

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