SELECT SUBCOMMITTEE ON THE CORONAVIRUS CRISIS

UNNECESSARY COSTS:
HOW THE TRUMP ADMINISTRATION
ALLOWED THOUSANDS OF
AVIATION WORKERS TO
LOSE THEIR JOBS

STAFF ANALYSIS
OCTOBER 9, 2020

COVIDOVERSIGHT
COVIDOVERSIGHT
CORONAVIRUS.HOUSE.GOV

 “UNNECESSARY COSTS”: HOW THE TRUMP ADMINISTRATION ALLOWED THOUSANDS OF AVIATION WORKERS TO LOSE THEIR JOBS

This staff report documents how the Department of the Treasury’s implementation of the Payroll
Support Program (PSP) caused thousands of workers at aviation contractors to lose their jobs.
Documents uncovered during the Select Subcommittee’s investigation show that aviation contractors
sought to avoid “unnecessary costs” by terminating employees before executing PSP agreements.
This report illustrates how Treasury incentivized aviation contractors to treat their workers as
“unnecessary costs” instead of protecting their jobs as Congress intended, and makes
recommendations for addressing these problems in the future.

1

CORONAVIRUS.HOUSE.GOV

 I.

EXECUTIVE SUMMARY

This staff report provides preliminary findings from the Select Subcommittee on the
Coronavirus Crisis’ investigation of the administration of the Payroll Support Program (PSP) by
the Department of the Treasury (Treasury). Congress created this relief program in the
Coronavirus Aid, Relief, and Emergency Security (CARES) Act to “preserve aviation jobs” by
providing payroll assistance to companies in exchange for keeping their workers on the payroll. 1
On July 29, 2020, the Select Subcommittee, the Committee on Transportation and
Infrastructure, and the Committee on Financial Services launched an investigation into the
disbursement of PSP funds to aviation contractors. The Committees sent letters to Treasury and
four aviation contractors that were receiving hundreds of millions of dollars in payroll assistance
despite reports that they had laid off thousands of employees: Gate Gourmet Inc., Swissport
USA Inc., Flying Food Fare Inc., and G2 Secure Staff LLC. 2
Congress intended the PSP to provide eligible aviation companies with six months of
financial assistance to cover the paychecks of their pre-pandemic workforce in exchange for
maintaining that workforce for six months, ending on September 30, 2020. After reviewing tens
of thousands of pages of documents and conducting briefings with Treasury and each of the four
contractors, Select Subcommittee staff finds that the Trump Administration’s implementation of
the PSP significantly weakened the Program’s impact on job preservation. Contrary to
congressional intent, Treasury permitted aviation contractors to lay off thousands of workers and
receive full payroll support calculated based on the companies’ pre-pandemic workforce.
The investigation identified four key decisions by Treasury that undermined the job
retention purpose of the Program:
1.

Treasury’s delays in disbursing PSP funds resulted in more than 16,500
layoffs and furloughs at 15 companies—more than 15 percent of the aviation
contractor workforce. Treasury disregarded the CARES Act mandate to begin
distributing payroll assistance within ten days of the law’s enactment, and instead
took months to execute the necessary agreements. These delays led at least 15
different aviation contractors to lay off or furlough at least 16,655 employees
before the agreements took effect, more than 15% of the existing aviation
contractor workforce.

2.

Treasury permitted layoffs up to the execution date of a PSP agreement,
leading companies to “urgently” fire employees before signing agreements.
Treasury knew companies were conducting layoffs while their PSP applications
were pending but failed to object or require that employees be rehired. For
example, internal emails show Swissport “urgently” sought to “furlough or
terminate” staff before signing the PSP agreement to avoid “unnecessary costs

1

Coronavirus Aid, Relief, and Emergency Security (CARES) Act, Pub. L. No. 116-136, § 4112(a) (2020).

Each of these contractors produced documents in response to the Select Subcommittee’s requests. Gate
Gourmet failed to complete its document production by the date of this report, despite having more than two months
to do so.
2

2

 once the ink is on the paper.” Treasury’s decision to allow layoffs while
applications were pending, in conjunction with the delay in executing agreements,
meant that many companies paused layoffs for far shorter than the six months
Congress intended. In fact, five contractors received PSP funds in September,
meaning that they agreed to pause layoffs for less than one month.
3.

Treasury permitted companies to spend PSP funds without a deadline—
leading many companies to stockpile the money rather than rehire laid-off
workers. Treasury allowed companies to spend PSP funds without a time limit,
thereby removing any incentive to use these funds to rehire workers. For
example, Flying Food Fare and Swissport conducted significant layoffs before
receiving hundreds of millions of dollars in payroll assistance, but neither
company rehired a single worker based on receipt of those taxpayer dollars.
Instead, they are slowly spending those funds to pay a reduced workforce.

4.

Treasury failed to reduce the amount of financial assistance awarded despite
mass layoffs, awarding companies payroll support for jobs that no longer
existed. Treasury calculated the amount of assistance awarded to each company
based on 2019 payroll figures. Although companies alerted Treasury to
significant layoffs prior to finalizing PSP agreements, Treasury failed to lower the
amount awarded based on the reduced headcount. As a result, companies
received payroll assistance for jobs they already eliminated.

To address these problems and prevent the further loss of aviation jobs, this report also
makes several recommendations, including (1) passing a new round of payroll support to
preserve aviation jobs as part of a broader, comprehensive response to the coronavirus pandemic;
(2) amending the CARES Act to prohibit layoffs by aviation contractors until all PSP funds are
expended; and (3) ensuring that Treasury expedites the distribution of any additional payroll
support funding.
II.

BACKGROUND

The coronavirus pandemic devastated the national economy and hit the aviation industry
particularly hard. In March 2020, air passenger volume plummeted nearly 53% below 2019
rates. 3 Reeling from the rapid drop in demand, companies across the industry “scrambled to
cancel flights” and “lay off workers.” 4
To provide urgent relief to workers in the aviation industry, Congress established the
Payroll Support Program as part of the CARES Act, which was enacted on March 27, 2020.
Congress structured the Program as support for workers to keep their jobs, not as a corporate
bailout. The CARES Act authorizes Treasury to provide up to $32 billion to “preserve aviation
jobs and compensate air carrier industry workers,” including $3 billion reserved for aviation
Air Passenger Market Analysis, IATA (Mar. 2020) (online at www.iata.org/en/iatarepository/publications/economic-reports/air-passenger-monthly-analysis---mar-2020/).
3

Id.; Airlines Cancel Flights and Lay Off Workers as Stocks Plummet, New York Times (Mar. 12, 2020)
(online at www.nytimes.com/2020/03/12/business/economy/coronavirus-airlines-trump-europe.html).
4

3

 contractors. 5 The Act mandates that PSP funds must be used exclusively to pay employee
wages, salaries, and benefits. 6 Recognizing the dire circumstances of aviation workers, the Act
requires the Treasury Secretary to make initial payments “[n]ot later than 10 days after the date
of enactment of this Act.” 7
Congress intended to keep aviation workers connected to their jobs for at least the six
months from April 2020 through September 2020. 8 The maximum amount of assistance
available under the Payroll Support Program is calculated based on payroll costs during the sixmonth period from April 2019 through September 2019. 9 To receive this payroll assistance,
companies must agree to “refrain from conducting involuntary furloughs or reducing pay rates
and benefits until September 30, 2020.” 10 In other words, companies could receive six months
of payroll assistance in exchange for a commitment to maintain their workforce for six months.
To implement the law effectively, Congress gave Treasury broad authority to specify the
“form” of financial relief and to impose “such terms and conditions … as the Secretary
determines appropriate.” 11
III.

TREASURY’S PSP IMPLEMENTATION LED TO THOUSANDS OF
AVIATION WORKERS UNNECESSARILY LOSING THEIR JOBS

Treasury’s implementation of the Payroll Support Program undermined the program’s job
preservation purpose. Treasury permitted aviation contractors to lay off tens of thousands of
workers through the worst months of the pandemic and still receive full payroll support
calculated based on pre-pandemic workforce numbers—the same amount they would have
received if they had not laid off a single worker. Treasury also removed any incentive for
companies to use PSP funds to rehire or recall any impacted workers. Because of these
decisions, tens of thousands of aviation workers remain out of work, despite billions of dollars in
taxpayer assistance intended to support their jobs.
The Select Subcommittee’s investigation identified four key decisions by Treasury that
undermined the job retention purpose of the Program:
A.

Treasury’s Delays in Disbursing PSP Funds Resulted in More than 16,500
Layoffs and Furloughs at 15 Companies—More Than 15 Percent of the
Aviation Contractor Workforce

Although the CARES Act required Treasury to disburse initial PSP funds by April 6,
2020, Treasury did not start making payments until May 15, 2020, with some contractors not
5

CARES Act, Pub. L. No. 116-136, § 4112(a) (2020).

6

Id.

7

Id. § 4113(b)(2).

8

Id. § 4114(a)(1).

9

Id. § 4113(a)(3).

10

Id. § 4114(a)(1).

11

Id. § 4114(b)(1)(A).
4

 securing final PSP agreements until September 2020. These delays are particularly concerning
because Treasury’s own data showed that aviation contractors were hemorrhaging workers and
in need of immediate assistance. Aviation contractors reported conducting 57,833 layoffs and
furloughs prior to applying for PSP assistance—more than 17 times the number reported by
passenger air carriers. 12 Aviation contractors also conducted at least 16,655 layoffs between the
date PSP applications opened and when the companies finalized their agreements with Treasury,
as shown in Appendix 1.

Source: Department of the Treasury, Chart Showing Involuntary Reductions (Produced to Select Subcommittee
Sept. 21, 2020).

The CARES Act directed Treasury to “make initial payments to air carriers and
contractors” “not later than 10 days after the date of enactment of this Act,” or April 6, 2020. 13
Contractors told the Select Subcommittee that they relied on this statutory language and expected
to receive at least some initial funds within 10 days. 14 Unfortunately, no contractor received PSP
funds by that date. Many contractors applied on April 2, 2020, the day Treasury opened the
application process, but the earliest contractor PSP agreement was executed on May 15, 2020. 15
Treasury’s process was slow and protracted. Treasury received 1,060 applications,
including 476 from aviation contractors. 16 Select Subcommittee staff found that contractor
applicants typically received an initial contact from Treasury in mid-April, a preliminary term
sheet in mid-May, and a draft promissory note days or weeks later. These documents frequently
required revisions, and sometimes multiple rounds. Ultimately, Swissport waited 99 days before
its PSP agreement was finalized, Gate Gourmet waited 78 days, Flying Food Fare waited 74
days, and G2 waited 68 days. See Appendix 2.
Applicants expressed frustration about the delays. After expecting funding on May 29
and learning of another delay, a Flying Foods executive wrote to another company executive:
Department of the Treasury, Chart Showing Involuntary Reductions (Produced to Select Subcommittee
Sept. 21, 2020) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/Treasury%20Chart_one%20page.pdf).
12

13

CARES Act, Pub. L. No. 116-136, § 4113(b)(2) (2020).

See, e.g., Briefing by Mark Noffke, Chief Financial Officer & Executive Vice President, Flying Food
Fare, to Staff, Select Subcommittee on the Coronavirus Crisis (Aug. 18, 2020).
14

Department of the Treasury, Payroll Support Program Payments (online at
https://home.treasury.gov/policy-issues/cares/preserving-jobs-for-american-industry/payroll-support-programpayments) (last accessed Oct. 3, 2020).
15

Briefing by Gary Grippo, Deputy Assistant Secretary for Public Finance, Department of the Treasury, to
Staff, Select Subcommittee on the Coronavirus Crisis (Aug. 26, 2020).
16

5

 “Unbelievable. When am I allowed to work like this?” 17 The final agreement with Flying Foods
would not be finalized for another 17 days.
Many delays were due to Treasury’s decision to withhold payroll support payments until
a company executed all loan documents, including the promissory note. The CARES Act states
that “in the sole determination of the Secretary,” Treasury may receive collateral as “appropriate
compensation to the Federal Government for the provision of the financial assistance.” 18 To
secure this collateral, Treasury required each contractor that received more than $37.5 million in
PSP funds to sign a promissory note. 19 Nothing in the CARES Act required Treasury to wait
until the promissory note was finalized before issuing an initial payment. Treasury could have
issued initial payments under the $37.5 million threshold and conditioned any amount above
$37.5 million on the execution of the promissory note, but Treasury chose not to do so. 20
The first contractor agreement that included a note was executed on June 9, 2020—
almost a month after Treasury began finalizing other contractor agreements that did not require
promissory notes. 21 For some contractors, finalizing the terms of the promissory note took
months. For example, Swissport received its draft promissory note on May 28. 22 The company
exchanged questions and redlines with Treasury’s representatives for more than a month and
finally executed an agreement on July 5. 23 Swissport also informed the Select Subcommittee
that the promissory note was holding up the agreement between its subsidiary, Hallmark
Aviation Services L.P, and Treasury; 24 that agreement was not finalized until September 17,
2020. 25

Email from Wolfgang Hoenle, Chief Financial Officer, Flying Food Group to Mark Noffke, Chief
Financial Officer & Executive Vice President, Flying Food Group (May 29, 2020) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/FFF0004430_Wolfgang%20Hoenle%20email_Redacted.pdf).
17

18

CARES Act, Pub. L. No. 116-136, § 4117 (2020).

Department of the Treasury, Payroll Support Program Payments (online at
https://home.treasury.gov/policy-issues/cares/preserving-jobs-for-american-industry/payroll-support-programpayments) (last accessed Oct. 3, 2020).
19

This approach was possible under Treasury’s existing procedures. Treasury confirmed that it gave
applicants eligible for awards above the threshold of $37.5 million the choice to accept an award of $37.5 million
and not execute a promissory note. At least one contractor, AGI-CFI Holdings, took advantage of that option. See
Department of the Treasury, Payroll Support Program Payments (online at https://home.treasury.gov/policyissues/cares/preserving-jobs-for-american-industry/payroll-support-program-payments) (last accessed Oct. 3, 2020)
(identifying that AGI-CFI Holdings received an award for $37.5 million).
20

21

Id.

22
Swissport USA, Inc.’s Written Responses to the Questions Received from the Select Subcommittee on
the Coronavirus Crisis, the Committee on Financial Services, and the Committee on Transportation & Infrastructure
(Aug. 19, 2020).
23

Id.

Briefing by Michael Hargett, Chief Financial Officer, Swissport, to Staff, Select Subcommittee on the
Coronavirus Crisis (Aug. 19, 2020).
24

Department of the Treasury, Payroll Support Program Payments (online at
https://home.treasury.gov/policy-issues/cares/preserving-jobs-for-american-industry/payroll-support-programpayments) (last accessed Oct. 3, 2020).
25

6

 The consequences of these delays were profound. PSP applications languished at
Treasury during the peak of the crisis for the aviation industry: in April, May, and June air
passenger volume was down 95%, 90%, and 81%, respectively, compared to 2019. 26 Without
payroll assistance, many contractors furloughed and laid off workers, even though their PSP
applications were pending.
Flying Food Fare laid off 1,516 employees and furloughed 1,521 employees between the
time it submitted its application and when it executed its agreement with Treasury. 27 Swissport
laid off and involuntarily furloughed 3,873 workers between April 3 and July 10, when it
executed its agreement. 28 Gate Gourmet laid off 5,040 employees between April and the
execution of its agreement in June. 29 G2 was the only company examined by the Select
Subcommittee that conducted no layoffs or involuntary furloughs while its application was
pending. As shown in Appendix 2, the Select Subcommittee’s investigation revealed at least 15
aviation contractors that laid off workers between April 2, when Treasury opened the application
process, and the execution of their payroll assistance agreements. Had Treasury met the deadline
set by Congress, many of these jobs would have been preserved.
B.

Treasury Permitted Layoffs Up to the Execution Date of a PSP Agreement—
Leading Companies to “Urgently” Fire Employees Before Signing
Agreements

The CARES Act specifies that recipients of PSP funds cannot conduct involuntary
terminations “until September 30, 2020.” 30 The Act is silent, however, on when the prohibition
commences, leaving the decision to Treasury’s discretion. Treasury decided that applicants
could conduct layoffs and furloughs up until the date their PSP agreement was executed, with no
rehiring required. This decision had the perverse effect of incentivizing companies to lay off or
furlough workers before executing the agreement. It also shortened the length of time that
companies were prohibited from conducting layoffs, with at least five contractors agreeing to
pause layoffs for less than one month. 31
Treasury communicated this decision through a form PSP agreement on its website,
which stated that PSP recipients could not conduct involuntary terminations “between the date of

Airlines for America, Tracking the Impacts of COVID-19 (updated Sept. 27, 2020) (online at
www.airlines.org/wp-content/uploads/2020/03/A4A-COVID-Impact-Updates-104.pdf).
26

Letter from Michel R. Sklaire, Greenberg Traurig LLP, Counsel to Flying Food Fare, to Chairman James
E. Clyburn, Select Subcommittee on the Coronavirus Crisis (Aug. 31, 2020).
27

28

19, 2020).

Swissport USA, Inc., Chart Summarizing Furloughs and Layoffs (Produced to Select Subcommittee Aug.

29
Gate Gourmet’s Written Responses for the Select Subcommittee on the Coronavirus Crisis, Appendix 1
(Aug. 12, 2020).
30

CARES Act, Pub. L. No. 116-136, § 4114(a)(1) (2020).

Department of the Treasury, Payroll Support Program Payments (online at
https://home.treasury.gov/policy-issues/cares/preserving-jobs-for-american-industry/payroll-support-programpayments) (last accessed Oct. 3, 2020) (showing that five contractors executed their agreements in September 2020).
31

7

 this Agreement and September 30, 2020.” 32 When Gate Gourmet sought clarification on the
layoff prohibition and whether the company was required to rehire terminated workers, Treasury
responded that the PSP agreement “will be the lens behind which we view the world.” 33
Treasury was aware that applicants were conducting layoffs while their applications were
pending. For example, Swissport’s PSP applications informed Treasury that the company had
conducted significant layoffs and furloughs after March 1, 2020, and that “[s]ignificantly more
involuntary furloughs are pending.” 34

Source: Swissport North America Holding, Inc., Payroll Support Application Form for Air Carriers and
Contractors (Apr. 3, 2020).

Flying Food Fare similarly informed Treasury that it anticipated conducting additional
layoffs and furloughs. During the company’s first meeting with Treasury, Flying Food Fare
explained that it had already terminated 3,000 employees and furloughed 1,700 more and would
“terminate the furlough employees and 65% of the salary employees” if it did not receive PSP
funding or other financing. 35 In the weeks prior to executing its agreement, Flying Food Fare
informed Treasury that “[b]ecause funds were not received when anticipated, additional cuts
have been made to staff since the application o[f] April 2.” 36
Some contractors presumed—incorrectly—that Treasury would require them to rehire
workers under the PSP. In its April 3, 2020 submission, Gate Gourmet told Treasury that the
32
Department of the Treasury, Payroll Support Program Agreement (online at
https://home.treasury.gov/system/files/136/Form-of-PSP-Agreement.pdf) (last accessed Oct. 3, 2020).
33

2020).

Gate Gourmet’s Written Responses for the Select Subcommittee on the Coronavirus Crisis (Aug. 12,

Swissport North America Holding, Inc., Payroll Support Application Form for Air Carriers and
Contractors (signed on Apr. 3, 2020) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/SP-CONG0003907_Redacted.pdf).
34

Flying Food Fare, CARES Act: Initial Discussion Topics / Requests (Apr. 21, 2020) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/FFF-0000173-175_Redacted.pdf). In this
document, Flying Food Fare provides bullet-point responses to agenda topics provided by Treasury for an upcoming
call. The company emailed the document to Treasury in advance of the call.
35

Email from Lee Ann Anderson, Greenberg Traurig LLP, Counsel for Flying Food Fare, to Benjamin H.
Weiner, Sullivan & Cromwell LLP, Counsel for Treasury (May 20, 2020) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/FFF-0002893_Redacted_0.pdf).
36

8

 company was “committed to restoring our workforce to the extent of the Awardable Amount,”
and noted that the company would “need the full amount of financial assistance requested in this
Application in order to restore our workforce to pre-COVID-19 levels.” 37 It requested that, if
the company received an adjusted amount, Treasury “correspondingly adjust the employment
level gategroup is required to maintain.” 38 However, Treasury never required the reinstatement
of any workers. Gate Gourmet was ultimately the only one of the four contractors examined by
the Select Subcommittee that recalled any workers upon receiving PSP funds, although it did not
come anywhere close to “restoring” the company’s “workforce to pre-COVID levels.” Gate
Gourmet recalled 900 workers, 39 but the company’s headcount in July 2020 (the month after
completing its agreement) was 3,954, well less than half of the 9,541 workers the company
employed in February 2020. 40
Treasury’s decision to permit layoffs until the PSP agreement’s execution date and not to
require the rehiring of laid-off workers incentivized companies to lay off or furlough workers
before executing the agreement. Internal Swissport communications show that in the weeks
prior to executing the company’s PSP agreement in June 2020, the company “urgently” sought to
“furlough or terminate” staff before signing the PSP agreement to avoid “unnecessary costs once
the ink is on the paper.” 41

Letter from President Joshua Janow, gategroup US, and Chief Financial Officer Jens Kuhlen, gategroup
North America, to Payroll Support Applications, Department of the Treasury (Apr. 3, 2020) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/GG463_Redacted.pdf).
37

38

Id.

Briefing by President Joshua Janow, Gate Gourmet Inc., to Staff, Select Subcommittee on the
Coronavirus Crisis (Aug. 12, 2020).
39

40

2020).

Gate Gourmet’s Written Responses for the Select Subcommittee on the Coronavirus Crisis (Aug. 12,

Email from Peter Kohl, COO Cargo, Swissport USA, Inc., to Andrew Morch, Vice President Cargo
Services West Region, Swissport USA, and Michael Schneider, Vice President, Cargo, USA East, Swissport USA
(June 18, 2020) (online at https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/SPCONG0003864_Redacted.pdf).
41

9

 Source: Email from Peter Kohl, COO Cargo, Swissport USA, Inc., to Andrew Morch, Vice President Cargo
Services West Region, Swissport USA, and Michael Schneider, Vice President, Cargo, USA East, Swissport USA
(June 18, 2020).

Treasury’s decision had another consequence: shortening the length of time during
which companies were prohibited from laying off their employees. Congress intended to give
companies six months of payroll support in exchange for a commitment to forgo layoffs and
furloughs for six months. The CARES Act specified that PSP recipients could not conduct
involuntary layoffs or furloughs or reduce pay rates or benefits “until September 30, 2020”—
approximately six months after companies should have received initial PSP payments. 42 Due to
Treasury’s decision to delay PSP agreements but permit layoffs until the agreements’ execution,
some contractors were only restricted from laying off workers for a matter of weeks, rather than
the six months contemplated in the statute.
C.

Treasury Permitted Companies to Spend PSP Funds Without A Deadline –
Leading Many Companies to Stockpile the Money Rather Than Rehire LaidOff Workers

The CARES Act specifies that recipients cannot conduct furloughs or layoffs until
September 30, 2020, but the law does not address whether recipients must also expend the PSP
money by that date, leaving that decision to Treasury’s discretion. Unfortunately, Treasury
chose to place no restrictions on when the money must be spent. Without a deadline to spend the
funds, companies had little or no incentive to rehire previously laid off or furloughed workers.
Many chose not to rehire workers and instead to use the funds to cover payroll for the remaining
workers over a period of many months.
In frequently-asked questions posted online on April 3, 2020, Treasury stated it was
considering the deadline for spending PSP funds and wrote, “Additional guidance will be
provided soon.” 43 On April 20, Treasury wrote, “There is no deadline for a Recipient to use
Payroll Support.” 44 Treasury told Select Subcommittee staff that this interpretation was its effort
to implement the CARES Act as written, despite the Act’s silence on the question. 45
During a staff briefing, Treasury confirmed the Department’s understanding that the
Program was intended to encourage companies to keep more workers employed than business
would otherwise demand. 46 Yet by permitting the expenditure of PSP funds without a deadline,
Treasury allowed companies to reduce their workforce to the minimum necessary to meet
diminished business demands and use the payroll assistance well into the future. Unsurprisingly,
some contractors, including Flying Food Fare and Swissport, plan to do exactly that.
42

CARES Act, Pub. L. No. 116-136, § 4114(a)(1) (2020).

Department of the Treasury, Q&A: Payroll Support to Air Carriers and Contractors (Apr. 3, 2020)
(online at https://home.treasury.gov/system/files/136/Airline-Payroll-Support-QA-4-3-20.pdf).
43

44
Department of the Treasury, Q&A: Payroll Support to Air Carriers and Contractors (Apr. 20, 2020)
(online at https://home.treasury.gov/system/files/136/PSP-FAQs-4-20-20.pdf).

Briefing by Gary Grippo, Deputy Assistant Secretary for Public Finance, Department of the Treasury, to
Staff, Select Subcommittee on the Coronavirus Crisis (Aug. 26, 2020).
45

46

Id.
10

 During briefings with the Select Subcommittee, Flying Food Fare confirmed that the
company “did not recall any workers based on the fact that PSP hit its bank accounts.” 47 The
Chief Financial Officer of Swissport stated that the company was only willing to recall or rehire
employees “based on the operational needs of the company,” 48 despite his own recognition in
internal communications that “CARES payroll support is designed for us to bring/keep personnel
back onto payroll that we would otherwise furlough or layoff.” 49

Source: Email from Michael Hargett, Chief Financial Officer, Swissport USA, to Swissport Personnel (May 6,
2020).

D.

Treasury Refused to Reduce the Amount of Financial Assistance Awarded
Despite Mass Layoffs, Awarding Companies Payroll Support for Jobs that
No Longer Existed.

The goal of the PSP was to provide payroll support to help companies maintain prepandemic employment levels through September 30, 2020. However, faced with companies that
laid off thousands of workers before applying for payroll support and thousands more while their
applications were pending, Treasury chose not to reduce the amount awarded to companies—
even though many of the company’s workers were no longer employed and would not benefit.
As a result, companies received an identical amount of payroll assistance regardless of the
number of employees they had laid off since the beginning of the pandemic. Such an outcome is
contrary to congressional intent and wastes taxpayer dollars by giving companies funds to
support employees they already laid off.
Treasury has argued that it did not have the discretion to vary the payroll support awards
in this way, but that position is not consistent with the CARES Act. The Act requires that
Treasury base the amount of payroll assistance on a company’s payroll costs between April and
September 2019, as a proxy for expected payroll costs between April and September 2020. 50 It
also granted Treasury the discretion to determine the “appropriate” “terms and conditions” for

Briefing by Mark Noffke, Chief Financial Officer, Flying Food Fare, Inc., to Staff, Select Subcommittee
on the Coronavirus Crisis (Aug. 18, 2020).
47

48
Briefing by Michael Hargett, Chief Financial Officer, Swissport USA, to Staff, Select Subcommittee on
the Coronavirus Crisis (Aug. 19, 2020).

Email from Michael Hargett, Chief Financial Officer, Swissport USA, to Swissport Staff (May 6, 2020)
(online at https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/SPCONG0004203_final_Redacted.pdf).
49

50

CARES Act, Pub. L. No. 116-136, § 4113(a)(3) (2020).
11

 the financial assistance. 51 Treasury has taken the position that it lacked the discretion to “change
the formula” provided in the CARES Act, 52 but this ignores the Department’s authority to set
appropriate terms and conditions. Moreover, statutes must be interpreted holistically. 53 Looking
at the Payroll Support Program as a whole, it would make little sense to conclude that Congress
sought to give companies the same amount of payroll assistance regardless of how many layoffs
they conducted and the size of the current workforce.
IV.

RECOMMENDATIONS

Congress appropriated billions of dollars to keep aviation workers employed at least
through September 30, 2020. Unfortunately, Treasury’s poor implementation of the Payroll
Support Program meant that thousands of workers lost their jobs well before that date—even
though their former employers received taxpayer assistance to cover the cost of their paychecks.
Congress and Treasury should consider several actions to ensure that aviation industry payroll
support funds are deployed responsibly. The following recommendations are specifically
focused on payroll support to aviation contractors.
A.

Congress Should Pass A Second Round of Payroll Support with Additional
Protections to Preserve Aviation Jobs as Part of a Broader Response to the
Coronavirus Crisis

The aviation industry is among the hardest hit by the pandemic-induced economic crisis
and has recovered only marginally since March. Tens of thousands of aviation workers have
already lost their jobs through no fault of their own, and, without a national plan to contain the
virus, many more workers stand to lose their jobs. These workers deserve support so they and
their families can survive until people are willing to travel again and the industry is able to get
back on its feet. Congress should pass additional payroll support for contractors and the rest of
the aviation industry as part of a broader, comprehensive response to the coronavirus pandemic,
such as the updated Heroes Act, which House Democrats passed on October 1, 2020. 54
In addition to other critical measures to protect American workers, families, and
communities, the updated Heroes Act provides supplemental payroll support to the aviation
industry, and includes additional protections for aviation contractor workers by: (1) prohibiting
involuntary reductions until the contractor exhausts the payroll assistance; (2) prohibiting
involuntary reductions after the passage of the legislation (regardless of how long it takes to
execute a final agreement); and (3) clarifying that Treasury may claw back PSP funds, including
51

Id.; see also id. § 4113(b)(1)(A).

Letter from Frederick W. Vaughn, Principal Deputy Assistant Secretary for Legislative Affairs,
Department of the Treasury, to Chairman James E. Clyburn, Select Subcommittee on the Coronavirus Crisis (Aug.
12, 2020).
52

See, e.g., United Savings Ass’n v. Timbers of Inwood Forest Associates, 484 U.S. 365, 371 (1988)
(“Statutory construction, however, is a holistic endeavor. A provision that may seem ambiguous in isolation is often
clarified by the remainder of the statutory scheme—because the same terminology is used elsewhere in a context
that makes its meaning clear … or because only one of the permissible meanings produces a substantive effect that
is compatible with the rest of the law.”).
53

54

H.R. 8406.
12

 those funds that were based on jobs that had already been terminated and those funds that remain
substantially unused because of significant payroll reductions.
B.

Congress Should Amend the CARES Act to Prohibit Involuntary Layoffs
and Furloughs as Long as Contractors Have PSP Funds.

Congress should amend the CARES Act to make the statutory prohibition on involuntary
furloughs and layoffs persist until a contractor expends all of its payroll support funds awarded
under the Act. This would prevent contractors like Gate Gourmet, Flying Food Fare, and
Swissport from conducting layoffs while they had taxpayer dollars left to cover the paychecks of
their employees.
The updated Heroes Act would amend the CARES Act to extend the prohibition on
layoffs or furloughs until “all funds are expended.” With respect to new funding, the updated
Heroes Act would require contractors to refrain from conducting involuntary furloughs until
“March 31, 2021, or the date on which the contractor exhausts such financial assistance,
whichever is later.” 55
C.

In Any Further Payroll Support, Treasury Should Expedite Funding

In any additional round of payroll support, Treasury must learn from its mistakes and
ensure that job retention is the top priority. To save as many jobs as possible, Treasury should
expedite payroll support funding to contractors, including providing eligible companies with
immediate initial payments if necessary—even if those initial payments are limited and precede
the execution of any requisite promissory notes.

55

Id.
13

 APPENDIX 1
AVIATION CONTRACTORS KNOWN TO HAVE LAID OFF AND FURLOUGHED
WORKERS AFTER APPLYING FOR THE PAYROLL SUPPORT PROGRAM
Note: Layoff and furlough numbers for Gate Gourmet, Swissport, and Flying Food Fare are
based on information received by the Select Subcommittee in the course of its investigation.
Furlough and layoff numbers for other companies are based on state agency filings and public
reporting and may substantially undercount actual layoffs and furloughs.
Contractor

Payroll Assistance
Agreement Date i

Total Anticipated
Payroll Support ii

Known Layoffs/
Furloughs Following
PSP Application
Opening

Sky Chefs Inc.

7/30/2020

$214,175,084

349 iii

Gate Gourmet

6/19/2020

$171,424,598

7,160 iv

Swissport

7/10/2020

$170,359,789

3,873 v

Flying Food Fare

6/15/2020

$85,020,818

2,037 vi

Prospect Airport
Services Inc.

7/10/2020

$73,263,755

1,364 vii

Primeflight Aviation
Services Inc.

6/15/2020

$65,708,621

198 viii

The Nordam Group
LLC

6/19/2020

$54,044,828

210 ix

Thales USA Inc.

7/10/2020

$47,616,120

809 x

Aviation Technical
Services

6/15/2020

$39,949,510

142 xi

American Sales and
Management Org.
LLC (a/k/a Eulen
America)

5/29/2020

$25,812,052

100 xii

Constant Aviation
LLC

5/22/2020

$23,271,516

52 xiii

Prosegur Services
Group Inc.

6/2/2020

$22,620,474

27 xiv

14

 Total Airport
Services

5/22/2020

$20,828,745

68 xv

JetStream Ground
Services

5/19/2020

$13,117,705

176 xvi

ACTS-Aviation
Security

6/24/2020

$10,829,005

90 xvii

Total

16,655

Department of Treasury, Payroll Support Program Payments (online at https://home.treasury.gov/policyissues/cares/preserving-jobs-for-american-industry/payroll-support-program-payments).
i

ii

Id.

iii
State of California, Employment Development Department, WARN Report (07/01/2019 – 06/30/2020)
(online at https://edd.ca.gov/Jobs_and_Training/warn/WARN-Report-for-7-1-2019-to-6-30-2020.pdf) (139 workers
laid-off effective May 29, 2020); State of California, Employment Development Department, California COVID
WARNs (March 1, 2020 – September 10, 2020) (on file) (210 workers laid-off effective on May 29, 2020).
iv
Gate Gourmet’s Written Responses for the Select Subcommittee on the Coronavirus Crisis (Aug. 12,
2020). This number is the sum of Gate Gourmet’s layoffs and furloughs in April, May, and June. Because some
workers may have been furloughed and then terminated, this sum may include certain workers in both categories.

Swissport USA, Inc., Chart Summarizing Furloughs and Layoffs (Produced to Select Subcommittee Aug.
19, 2020). This number is the sum of Swissport’s layoffs and involuntary furloughs between April 3 and July 10
when it executed its PSP agreement. Because some workers may have been furloughed and then terminated, this
sum may include certain workers in both categories.
v

Letter from Michel R. Sklaire, Greenberg Traurig LLP, Counsel to Flying Food Fare, to Chairman James
E. Clyburn, Select Subcommittee on the Coronavirus Crisis (Aug. 31, 2020). This number includes both voluntary
and involuntary furloughs and layoffs during the time that Flying Food Fare’s PSP application was pending.
vi

Here Are the Philadelphia-Area Companies That Laid Off, Furloughed Worker in April, Philadelphia
Business Journal (May 4, 2020) (online at www.bizjournals.com/philadelphia/news/2020/05/04/here-are-thephiladelphia-area-companies-that-laid.html) (329 layoffs); State of Illinois, Archived WARN Reports, April 2020
Monthly WARN Report (online at
www.illinoisworknet.com/DownloadPrint/April%202020%20Monthly%20WARN%20Report.xlsx) (829 layoffs
between Mar. 22, 2020 to April 25, 2020); State of Wisconsin, 2020 WARN Notices and Updates (online at
https://dwd.wisconsin.gov/dislocatedworker/warn/) (accessed on Oct. 8, 2020) (48 layoffs beginning on Apr. 22,
2020); State of California, Employment Development Department, WARN Report (07/01/2019 – 06/30/2020)
(online at https://edd.ca.gov/Jobs_and_Training/warn/WARN-Report-for-7-1-2019-to-6-30-2020.pdf) (13 temporary
layoffs effective April 20, 2020); State of Colorado, 2020 WARN Notices Received: Public List (online at
https://docs.google.com/spreadsheets/d/1Km1mSUnCGE3EtZQTnZEUwxbdDTOcDZmNx6bviTwl2jI/edit#gid=0)
(accessed on Oct. 8, 2020) (145 workers laid-off effective April 8, 2020). The number cited here incudes layoffs that
occurred starting in March, but the specific dates of the layoffs are unclear given the date ranges in the WARN
Notices.
vii

viii
State of California, Employment Development Department, WARN Report (07/01/2019 – 06/30/2020)
(online at https://edd.ca.gov/Jobs_and_Training/warn/WARN-Report-for-7-1-2019-to-6-30-2020.pdf) (198 layoffs
effective April 9, 2020).

15

 State of Oklahoma, WARN Information (online at
https://okjobmatch.com/ada/mn_warn_dsp.cfm?id=737&callingfile=mn_warn_dsp.cfm&hash=038E149B592D1E0
3326C870EDF681A15) (noting 210 employees affected) (accessed on Sept. 25, 2020).
ix

x
State of California, Employment Development Department, WARN Report (07/01/2019 – 06/30/2020)
(online at https://edd.ca.gov/Jobs_and_Training/warn/WARN-Report-for-7-1-2019-to-6-30-2020.pdf) (128 layoffs
effective May 8, 2020 and 681 layoffs effective on May 18).
xi
State of Washington, Worker Adjustment and Retraining Notification (WARN) (https://esd.wa.gov/aboutemployees/warn) (142 permanent layoffs effective June 4, 2020) (accessed on Sept. 25, 2020).

Delta Airlines Contractor Got $25 Million Bailout. It Still Laid Off Workers., Aviation Pros (Aug. 14,
2020) (online at www.aviationpros.com/airlines/news/21150234/delta-airlines-contractor-got-a-25-million-bailoutit-still-laid-off-workers) (noting about 100 of the company’s 160-170 employees were laid off).
xii

State of Ohio, Department of Job and Family Services, WARN: Current Public Notices of Layoffs and
Closures (online at https://jfs.ohio.gov/warn/current.stm) (52 workers laid-off between May 10-15, 2020).
xiii

State of Maryland, Department of Labor, Work Adjustment and Retraining Notification (WARN) Log
Year 2020 – Division of Workforce Development & Adult Learning (online at
www.dllr.state.md.us/employment/warn.shtml) (27 layoffs effective May 18, 2020) (accessed on Sept. 25, 2020).
xiv

State of Texas, Texas Workforce Commission, Worker Adjustment and Retraining Notification (WARN)
Notices (online at www.twc.texas.gov/businesses/worker-adjustment-and-retraining-notification-warnnotices#warnNotices) (68 workers laid-off on April 24, 2020).
xv

xvi
State of California, Employment Development Department, WARN Report (07/01/2019 – 06/30/2020)
(online at https://edd.ca.gov/Jobs_and_Training/warn/WARN-Report-for-7-1-2019-to-6-30-2020.pdf) (176 workers
laid-off on April 22, 2020).
xvii
State of Georgia, Department of Labor, Business Layoff/Closure Listing (Statewide, 01/01/2020 –
07/20/2020) (online at www.dol.state.ga.us/public/es/warn/searchwarns) (90 workers laid-off on April 30, 2020).

16

 APPENDIX 2
CONTRACTOR CASE STUDIES
The following case studies illustrate how Treasury’s administration of the Payroll
Support Program resulted in aviation contractors laying off thousands of employees and still
receiving tens of millions of dollars in federal funds. Each contractor was subject to delays and
was prohibited from conducting layoffs for less than the six months that Congress intended.
These case studies also show that each contractor approached the PSP differently. G2
implemented a no-furlough policy during the pendency of its PSP application to abide by the
“spirit of” the CARES Act, while the other contractors aggressively laid off workers while their
PSP agreements were pending. Gate Gourmet rehired some workers after receiving the PSP
funds, but Flying Food Fare and Swissport did not hire back a single worker.
Swissport
Total PSP Funding

$170,359,789

Flying Food Fare
$85,020,818

Gate Gourmet
$171,424,598

G2
$81,380,837

Average Number of
Employees in 2019

7,125

5,737

10,260

7,764

Days Between PSP
Application and
Agreement

99 days

74 days

78 days

68 days

Layoffs / Furloughs
While Application
Was Pending 1

2,491 / 1,382

1,516 / 1,521

5,040 / 2,120

0/0

Executive
Compensation Cuts

None

Yes, until May 1

Yes, until June 15

Yes, ongoing

Workers Recalled
due to PSP Funds

0

0

900

0

Length of
Prohibition on
Layoffs

82 days

107 days

103 days

113 days

Anticipated
Exhaustion of PSP
Funds

March 2021

Second Quarter
2021

March or April
2021

October 2020

The figures for Swissport are the sum of the company’s layoffs and involuntary furloughs between April 3
and July 10 when it executed its PSP agreement. The figures for Gate Gourmet are the sum of the company’s
layoffs and furloughs, respectively, in April, May, and June.
1

17

 A. Swissport
Swissport and its affiliates provide ground handling, cargo handling, and fueling services
to airports around the country. 2 Swissport received over $170 million of taxpayer dollars from
Treasury through the PSP—the third highest award to any aviation contractor. Swissport began
furloughing workers on February 5, 2020, as the spread of the coronavirus in Asia led to the
cancellation of flights to and from U.S. cities. 3 By the end of March, Swissport had furloughed
4,328 employees. 4
On April 3, 2020, Swissport filed a PSP application on behalf of six legal entities within
its U.S. group of companies. 5 For each of these entities, Swissport indicated that it intended to
conduct additional layoffs and involuntary furloughs. Treasury never requested any information
about those reductions.
After submitting its applications, Swissport expected the approval process to move
quickly in light of the ten-day disbursement deadline in the CARES Act. 6 Treasury, however,
did not initiate contact with the company until April 16. 7 On May 15, Treasury finally
presented a preliminary term sheet to Swissport, which included a proposed promissory note. 8
On May 28, Treasury sent Swissport a draft PSP agreement, promissory note, and supporting
documentation. 9 For the next month, Swissport and Treasury exchanged communications and

Letter from CEO Frank Mena, Swissport North America, Inc., to Chairman James E. Clyburn, Select
Subcommittee on the Coronavirus Crisis, Chairwoman Maxine Waters, Committee on Financial Services, and
Chairman Peter A. DeFazio, Committee on Transportation and Infrastructure (Aug. 12, 2020).
2

Email from Christopher Armstrong, Holland & Knight LLP, Counsel for Swissport, to Staff, Select
Subcommittee on the Coronavirus Crisis (Sept. 3, 2020); Swissport USA, Inc.’s Written Responses to the Questions
Received from the Select Subcommittee on the Coronavirus Crisis, the Committee on Financial Services, and the
Committee on Transportation & Infrastructure (Aug. 19, 2020).
3

Email from Christopher Armstrong, Holland & Knight LLP, Counsel for Swissport, to Staff, Select
Subcommittee on the Coronavirus Crisis (Sept. 3, 2020).
4

5
Swissport submitted six separate applications on April 6, following guidance that consolidated
applications would not be accepted. Swissport also filed an application on behalf of Hallmark Aviation Services,
L.P. (Hallmark). According to Treasury’s website, Treasury and Hallmark finally finalized an agreement on
September 17, 2020. Department of the Treasury, Payroll Support Program Payments (online at
https://home.treasury.gov/policy-issues/cares/preserving-jobs-for-american-industry/payroll-support-programpayments) (last accessed Oct. 3, 2020).

Briefing by Michael Hargett, Chief Financial Officer, Swissport, to Staff, Select Subcommittee on the
Coronavirus Crisis (Aug. 19, 2020).
6

7
Swissport USA, Inc.’s Written Responses to the Questions Received from the Select Subcommittee on the
Coronavirus Crisis, the Committee on Financial Services, and the Committee on Transportation & Infrastructure
(Aug. 19, 2020).
8

This term sheet was subsequently amended on both June 16 and June 26. Id.

9

Id.
18

 redlined legal documents. On June 18, Swissport’s Chief Financial Officer informed staff that
the PSP agreement was “not yet signed, but imminent.” 10
Despite the “imminent” prospect of payroll support funds, Swissport continued to lay off
and furlough employees through June, terminating 894 employees that month. 11 Swissport
informed the Subcommittee that the company did not consider the imminent PSP funding in its
decision-making around layoffs and furloughs because it could not “reasonably rely on the fact
that it would receive CARES Act funds” until the PSP agreement was fully executed. 12 Notably,
despite its significant layoffs, Swissport never implemented any cuts to executive compensation.
On July 10, 2020, Swissport executed its PSP agreement with Treasury. 13 Despite
receiving more than $170 million, it did not recall a single worker based on its receipt of PSP
funds. Instead, Swissport plans to only recall employees “based on the operational needs of the
company.” 14 Accordingly, the company anticipates that it will continue to use PSP funds into
the first quarter of 2021 to cover payroll expenses for its various components, including its cargo
company which has remained profitable during the pandemic. 15
B.

Flying Food Fare

Flying Food Fare, Inc. is the privately held parent company of Flying Food Group, LLC,
and International In-Flight Catering Company, Ltd. (collectively “FFF”) and provides catering
services to airlines and food retailers. FFF received more than $85 million in payroll support—
placing it among the top aviation contractor recipients. 16

10
Email from Peter Kohl, Chief Operating Officer Cargo, Swissport USA to Andrew Morch and Michael
Schneider, Swissport USA (June 18, 2020) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/SP-CONG0003864_Redacted.pdf).
11
Swissport USA, Inc.’s Written Responses to the Questions Received from the Select Subcommittee on
the Coronavirus Crisis, the Committee on Financial Services, and the Committee on Transportation & Infrastructure
(Aug. 19, 2020); Briefing by Michael Hargett, Chief Financial Officer, Swissport, to Staff, Select Subcommittee on
the Coronavirus Crisis (Aug. 19, 2020) (confirming that 894 employees were terminated in June).
12
Swissport USA, Inc.’s Written Responses to the Questions Received from the Select Subcommittee on
the Coronavirus Crisis, the Committee on Financial Services, and the Committee on Transportation & Infrastructure
(Aug. 19, 2020); Briefing by Michael Hargett, Chief Financial Officer, Swissport, to Staff, Select Subcommittee on
the Coronavirus Crisis (Aug. 19, 2020).
13
Department of the Treasury, Payroll Support Program Payments (online at
https://home.treasury.gov/policy-issues/cares/preserving-jobs-for-american-industry/payroll-support-programpayments).

Briefing by Michael Hargett, Chief Financial Officer, Swissport, to Staff, Select Subcommittee on the
Coronavirus Crisis (Aug. 19, 2020).
14

Id. (estimating that PSP funds would be spent in 5 months for Swissport’s cargo company, 6-7 months
for Swissport’s fueling company, and “a little longer” for the ground handling company).
15

Department of the Treasury, Payroll Support Program Payments (online at
https://home.treasury.gov/policy-issues/cares/preserving-jobs-for-american-industry/payroll-support-programpayments) (last accessed Oct. 3, 2020).
16

19

 In late January 2020, FFF began conducting layoffs and furloughs. 17 By the end of
March, FFF had furloughed, laid off, or reduced hours for over 5,200 employees—more than
ninety percent of its workforce—and reduced the pay rates for the company’s senior executives
and management. 18
On April 2, 2020, FFF submitted its application to Treasury for payroll support. Given
the language of the CARES Act, the company “believed that it would receive a disbursement,
even just a small amount, within ten (10) days of enactment of the CARES Act.” 19 FFF did not
receive a substantive response from Treasury until April 20, 2020, nearly three weeks later. 20
FFF repeatedly expressed frustration with Treasury’s delays, explaining that they were “anxious
to close this out” so the business would remain viable. 21
During its early discussions with Treasury, FFF informed Treasury of additional expected
layoffs and furloughs. 22 The company could not identify any instances in which Treasury
expressed any concerns about FFF’s layoffs or furloughs. 23 FFF conducted layoffs and
furloughs throughout the time its application was pending.
During FFF’s call with Treasury on May 11, Treasury presented FFF with a term sheet
and draft promissory note, which gave FFF “some comfort” that PSP funds would be

Briefing by Mark Noffke, Chief Financial Officer & Executive Vice President, Flying Food Group, to
Staff, Select Subcommittee on the Coronavirus Crisis (Aug. 18, 2020).
17

Id.; Letter from Michael R. Sklaire, Greenberg Traurig LLP, Counsel to Flying Food Fare, to Chairman
James E. Clyburn, Select Subcommittee on the Coronavirus Crisis, Chairman Peter A. DeFazio, Committee on
Transportation and Infrastructure, and Chairwoman Maxine Waters, Committee on Financial Services (Aug. 14,
2020).
18

Letter from Michael R. Sklaire, Greenberg Traurig LLP, Counsel to Flying Food Fare, to Chairman
James E. Clyburn, Select Subcommittee on the Coronavirus Crisis, Chairman Peter A. DeFazio, Committee on
Transportation and Infrastructure, and Chairwoman Maxine Waters, Committee on Financial Services (Aug. 14,
2020).
19

20

Id.

21
Email from Lee Ann Anderson, Greenberg Traurig LLP, to Ben Weiner, Sullivan & Cromwell LLP,
(May 21, 2020); Briefing by Mark Noffke, Chief Financial Officer & Executive Vice President, Flying Food Group,
to Staff, Select Subcommittee on the Coronavirus Crisis (Aug. 18, 2020) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/FFF-0002892_final_Redacted.pdf).
22
Flying Food Fare, CARES Act: Initial Discussion Topics / Requests (Apr. 21, 2020) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/FFF-0000173-175_Redacted.pdf). FFF
also later informed Treasury that “[b]ecause funds were not received when anticipated, additional cuts have been
made to staff since the application o[f] April 2,” and asked whether the company needed to revise its certification
that its PSP application was accurate. Email from Lee Ann Anderson, Greenberg Traurig LLP, to Ben Weiner,
Sullivan & Cromwell LLP (May 20, 2020) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/FFF-0002893_Redacted_0.pdf).

Briefing by Mark Noffke, Chief Financial Officer & Executive Vice President, Flying Food Group, to
Staff, Select Subcommittee on the Coronavirus Crisis (Aug. 18, 2020).
23

20

 forthcoming. 24 With the term sheet, FFF “thought we were almost there.” 25 Despite the
“comfort” that funds would be forthcoming, FFF continued to slash its employment levels,
laying off or furloughing 477 employees in May alone. 26
Although the forthcoming funds were not sufficiently certain to cease layoffs and
furloughs, on May 1, 2020, FFF restored senior executives and management to full pay because
the company anticipated that PSP funds would soon be made available. 27
On May 22, 2020, FFF signed its PSP agreement and promissory note and delivered them
to Treasury, “believ[ing] that the Secretary of Treasury would sign the PSP Agreement that day.”
On May 26, 2020, FFF signed a revised promissory note. Treasury informed FFF that “the
company should expect the Secretary to sign the documents and to receive the first disbursement
on May 27.” 28 But Treasury continued to delay the disbursement, much to FFF’s frustration. In
one email exchange on May 29, 2020, upon learning that he would have to wait at least three
more days for a signed agreement, the company’s Chief Financial Officer wrote: “Unbelievable.
When am I allowed to work like this?” 29
More revisions became necessary, however, and Treasury and FFF exchanged new
versions of the term sheet, PSP agreement, and promissory note in early June. 30 Rather than

Letter from Michael R. Sklaire, Greenberg Traurig LLP, Counsel to Flying Food Fare, to Chairman
James E. Clyburn, Select Subcommittee on the Coronavirus Crisis, Chairman Peter A. DeFazio, Committee on
Transportation and Infrastructure, and Chairwoman Maxine Waters, Committee on Financial Services (Aug. 14,
2020); Briefing by Mark Noffke, Chief Financial Officer & Executive Vice President, Flying Food Group, to Staff,
Select Subcommittee on the Coronavirus Crisis (Aug. 18, 2020).
24

Briefing by Mark Noffke, Chief Financial Officer & Executive Vice President, Flying Food Group, to
Staff, Select Subcommittee on the Coronavirus Crisis (Aug. 18, 2020).
25

26
Letter from Michael R. Sklaire, Greenberg Traurig LLP, Counsel to Flying Food Fare, to Chairman
James E. Clyburn, Select Subcommittee on the Coronavirus Crisis, Chairman Peter A. DeFazio, Committee on
Transportation and Infrastructure, and Chairwoman Maxine Waters, Committee on Financial Services (Aug. 14,
2020) (Exhibit 3.1).
27
Letter from Michael R. Sklaire, Greenberg Traurig LLP, Counsel to Flying Food Fare, to Chairman
James E. Clyburn, Select Subcommittee on the Coronavirus Crisis, Chairman Peter A. DeFazio, Committee on
Transportation and Infrastructure, and Chairwoman Maxine Waters, Committee on Financial Services (Aug. 14,
2020); Briefing by Mark Noffke, Chief Financial Officer, Flying Food Group, to Staff, Select Subcommittee on the
Coronavirus Crisis (Aug. 18, 2020).

Letter from Michael R. Sklaire, Greenberg Traurig LLP, Counsel to Flying Food Fare, to Chairman
James E. Clyburn, Select Subcommittee on the Coronavirus Crisis, Chairman Peter A. DeFazio, Committee on
Transportation and Infrastructure, and Chairwoman Maxine Waters, Committee on Financial Services (Aug. 14,
2020).
28

Email from Wolfgang Hoenle, Chief Financial Officer, Flying Food Group to Mark Noffke, Chief
Financial Officer & Executive Vice President, Flying Food Group (May 29, 2020) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/FFF0004430_Wolfgang%20Hoenle%20email_Redacted.pdf).
29

Letter from Michael R. Sklaire, Greenberg Traurig LLP, Counsel to Flying Food Fare, to Chairman
James E. Clyburn, Select Subcommittee on the Coronavirus Crisis, Chairman Peter A. DeFazio, Committee on
Transportation and Infrastructure, and Chairwoman Maxine Waters, Committee on Financial Services (Aug. 14,
2020).
30

21

 retain its workforce during the final days before execution, FFF continued to conduct layoffs
until June 8, three days before it executed its PSP agreement. 31
Despite receiving $85 million in payroll support, FFF did not rehire a single one of its
laid off or furloughed employees based on the receipt of PSP funds. FFF informed Select
Subcommittee staff that it would only rehire employees commensurate with business demands
and use any increased business revenue to cover “overhead” expenses, including “rent, supplies,
and other fixed costs.” FFF expects that its PSP funds will not be exhausted until the second
quarter of 2021. 32
C.

Gate Gourmet

Gate Gourmet, an airline catering company, received $171 million in payroll support—
the second highest award to any aviation contractor. 33 Gate Gourmet and its affiliates were
affected by the coronavirus in early 2020, as flights began to be cancelled on Asian routes. 34 By
the time of its application on April 3, 2020, Gate Gourmet had impacted approximately 8,600
employees—roughly 86% of its workforce—through involuntary furloughs, layoffs, or schedule
or salary reductions. 35
At the time of its application, Gate Gourmet was aware of the 10-day deadline in the
CARES Act and expected money to arrive approximately within that timeframe. Ultimately,
however, the process took 75 days. 36
As the delays mounted, Gate Gourmet sought to expedite the process and even withdrew
PSP applications on behalf of certain Gate Gourmet affiliates in the hope that would accelerate
the process. 37 The company expressed frustration at Treasury’s slow speed and the uncertainty
the delays caused: “More than a month after submission of our PSP application, Gate Gourmet
had not received PSP funding, had not been informed when funding would be forthcoming, and
did not know what amount, if any, Treasury would ultimately approve.” 38
On May 15, 2020, Gate Gourmet received a term sheet from Treasury indicating that a
portion of its requested funding would be in the form of a repayable loan and the amount of the
31

Id. Exhibit 3.1.

32
Briefing by Mark Noffke, Chief Financial Officer & Executive Vice President, Flying Food Group, to
Staff, Select Subcommittee on the Coronavirus Crisis (Aug. 18, 2020).
33

The final PSP award was to both Gate Gourmet and its affiliate, Gate Serve.

Letter from President Joshua Janow, Gate Gourmet Inc., to Chairman James E. Clyburn, Select
Subcommittee on the Coronavirus Crisis, Chairman Peter A. DeFazio, Committee on Transportation and
Infrastructure, and Chairwoman Maxine Waters, Committee on Financial Services (Aug. 11, 2020).
34

35

Id.

36
Briefing by President Joshua Janow, Gate Gourmet Inc., to Staff, Select Subcommittee on the
Coronavirus Crisis (Aug. 12, 2020).
37

Id.

Letter from President Joshua Janow, Gate Gourmet Inc., to Chairman James E. Clyburn, Select
Subcommittee on the Coronavirus Crisis, Chairman Peter A. DeFazio, Committee on Transportation and
Infrastructure, and Chairwoman Maxine Waters, Committee on Financial Services (Aug. 11, 2020).
38

22

 note. 39 Gate Gourmet ultimately received its executed PSP agreement and its initial payroll
support payment from Treasury on June 19, 2020—more than two-and-a-half months after
submitting its application. 40
During the months its application was pending, Gate Gourmet laid off and furloughed
thousands of workers. In May, Gate Gourmet laid off 4,958 employees and furloughed 104
workers. In June, Gate Gourmet laid off or furloughed 90 more employees before receiving the
PSP funds. 41
After receiving the PSP funds, unlike other contractors, Gate Gourmet brought back some
of its workers. It recalled approximately 900 workers and gave additional hours to
approximately 1,200 part-time workers. 42 Thousands of employees remained out of work, but on
July 15, 2020, Gate Gourmet decided to return management to full salaries— retroactively
effective to June 15, 2020, after they had been cut by 20 percent on April 1. 43
Gate Gourmet expects its PSP funding to be exhausted by March or April 2021. As of
mid-August, the company anticipated additional layoffs after the prohibition on layoffs lifted on
September 30. 44
D.

G2

G2 Secure Staff’s actions and response to the PSP stand in contrast to the other
contractors discussed in this report. Despite permission from Treasury to do otherwise, G2 tried
to act in accordance with “the spirit of” the CARES Act. 45
As the pandemic battered the aviation industry and before G2 had insight that it would be
eligible for the PSP, in early to mid-March, G2 “made the painful decision to furlough
employees.” 46 G2 furloughed a total of 2,187 employees at 41 airport locations, which was
39

Id.

40

Id.

Gate Gourmet’s Written Responses for the Select Subcommittee on the Coronavirus Crisis (Aug. 12,
2020) (Appendix 1).
41

42
Briefing by President Joshua Janow, Gate Gourmet Inc., to Staff, Select Subcommittee on the
Coronavirus Crisis (Aug. 12, 2020).
43

2020).

Gate Gourmet’s Written Responses for the Select Subcommittee on the Coronavirus Crisis (Aug. 12,

Briefing by President Joshua Janow, Gate Gourmet Inc., to Staff, Select Subcommittee on the
Coronavirus Crisis (Aug. 12, 2020); Letter from President Joshua Janow, Gate Gourmet Inc., to Chairman James E.
Clyburn, Select Subcommittee on the Coronavirus Crisis, Chairman Peter A. DeFazio, Committee on Transportation
and Infrastructure, and Chairwoman Maxine Waters, Committee on Financial Services (Aug. 11, 2020).
44

Briefing by Senior Vice President for Human Resources and Administration Julie Gostic and Chief
Financial Officer Roger Zebroski, G2 Secure Staff, to Staff, Select Subcommittee on the Coronavirus Crisis (Aug.
19, 2020).
45

Letter from President and CEO Daniel Norman, G2 Secure Staff, to Chairman James E. Clyburn, Select
Subcommittee on the Coronavirus Crisis, Chairman Peter A. DeFazio, Committee on Transportation and
Infrastructure, and Chairwoman Maxine Waters, Committee on Financial Services (Aug. 5, 2020).
46

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 announced the week of March 16 and became effective as of March 27, 2020. 47 At the same
time, it implemented salary reductions for all 219 corporate staff, managers, and directors. G2
reduced salaries for its four senior executives to zero. 48
After the passage of the CARES Act, G2 instituted a no-furlough policy effective April 1,
2020, which the company estimates saved 3,000 jobs. Although the company was under
financial pressure during the months of delay while its application was pending with Treasury,
G2 stated that it wanted “to abide by the spirit of the CARES Act” and “knew the [PSP] funding
was likely coming soon.” 49
Upon receipt of its PSP funding on June 12, G2 provided lump sum payments to all of its
frontline staff to restore missed compensation based on involuntary hour or schedule reductions
over the prior two months. 50 The company also partially restored salaries for corporate staff,
managers, directors, and executives, although executives continue to work at reduced rates. As
of August 2020, the CEO remained at zero compensation. 51
G2 expects to exhaust the PSP funding in approximately October 2020.

Letter from Daniel F. Donavan, Partner, King & Spalding, to Chairman James E. Clyburn, Select
Subcommittee on the Coronavirus Crisis, Chairman Peter A. DeFazio, Committee on Transportation and
Infrastructure, Chairwoman Maxine Waters, Committee on Financial Services (Aug. 18, 2020) (Appendix B).
47

48

Id.

Briefing by Senior Vice President for Human Resources and Administration Julie Gostic and Chief
Financial Officer Roger Zebroski, G2 Secure Staff, to Staff, Select Subcommittee on the Coronavirus Crisis (Aug.
19, 2020).
49

50

Id.

Letter from President and CEO Daniel Norman, G2 Secure Staff, to Chairman James E. Clyburn, Select
Subcommittee on the Coronavirus Crisis, Chairman Peter A. DeFazio, Committee on Transportation and
Infrastructure, and Chairwoman Maxine Waters, Committee on Financial Services (Aug. 5, 2020).
51

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