Republican senators push for $25 billion in additional airline job aid as virus continues to hit demand

Sixteen Republican senators on Wednesday backed $25 billion in additional federal aid for airline industry jobs as a spike in coronavirus cases in the U.S. hurt a modest recovery in flight demand in recent weeks.

The new support increases the likelihood that the funds get included in the next big aid package to help the U.S. weather the impact of the pandemic. More than 200 House lawmakers have already backed the extension, which would preserve jobs until the end of March 2021. The endorsement from GOP senators in the Republican-controlled Senate puts pressure on Senate Leader Mitch McConnell to include the provision in a final aid package. 

Airline shares were up sharply on news of the senators’ support. American Airlines was up 9% and United Airlines was trading more than 4% higher, while Delta Air Lines was 3.5% higher in late-afternoon trading.

U.S. passenger airlines were allocated $25 billion in aid, mostly in grants, that would preserve sector jobs until Oct. 1, but carriers have started telling tens of thousands of workers that their jobs are at risk when the relief terms expire this fall.

Meanwhile, travel demand remains at a fraction of last year’s levels.

“For these reasons, we support a clean extension of payroll support for passenger air carrier employees included in the CARES Act to avoid furloughs and further support those workers,” the lawmakers wrote in a letter, which was seen by CNBC, to Senate Majority Leader Mitch McConnell and Senate Minority Leader Chuck Schumer.

Labor unions had been urging Congress to extend the airline aid since June and CEOs of some of the largest U.S. carriers have recently said they back an extension. CEOs of American and Southwest, have said they have spoken with lawmakers and officials in Washington about the additional aid.