CHICAGO (Reuters) – U.S. aviation contractors laid off thousands of workers due to delays in payroll aid from the U.S. Treasury that was meant to protect jobs, an investigation by a U.S. House of Representatives subcommittee found.

Under the Coronavirus Aid, Relief and Economic Security Act (CARES Act), companies in the aviation sector were granted funds to cover six months of their payroll as the COVID-19 pandemic prompted a precipitous decline in air travel.

The legislation banned any job cuts through September, and requires the U.S. Department of the Treasury to begin distributing funds to eligible companies within 10 days of the law’s approval on March 27.

But an investigation by the House Select Subcommittee on the Coronavirus Crisis found that top contractors did not receive the money until months later, resulting in more than 16,500 layoffs and furloughs at 15 companies, more than 15% of the aviation contractor workforce.

“Had Treasury met the deadline set by Congress, many of these jobs would have been preserved,” the report said.

Treasury did not immediately comment.

Among the top seven contractors, Swissport waited 99 days before its payroll support agreement with Treasury was finalized, Gate Gourmet 78 days and Flying Food Fare 74 days, leading to nearly 12,000 layoffs and furloughs at those three companies alone.

The companies still received the full amount of federal aid based on their pre-pandemic workforce, even though they had laid off many of those workers, the report said.

Swissport, Gate Gourmet and Flying Food Fare did not immediately comment.

Aviation contractors were awarded $3 billion under the first CARES Act and could see those funds extended for another six months if Congress passes a second stimulus package.

The report recommends another round of aid but said layoffs should be prohibited until a company uses all of

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  • The US can live with a delayed new federal coronavirus relief package as long as it is implemented by early 2021, JPMorgan Asset Management global strategist Patrik Schowitz told CNBC.
  • “It’ll be better to get the stimulus now but as long as we get it early next year, we think the economy will be able to get through that,” the global strategist said, after President Donald Trump abruptly halted discussions over stimulus spending.
  • A second round of spending could be pushed to after the elections because both Trump and Democratic challenger Joe Biden want their name on the package, he said.
  • For investors, Schowitz recommended being “overweight” on risky assets like credit and equities in the medium-term.
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The US economy “can live” with the second round of stimulus being delayed until after the presidential election as long as it comes into effect by early 2021, Patrik Schowitz, a global strategist at JPMorgan Asset Management, told CNBC on Wednesday. 

Major economists were mostly expecting the next round to be dragged into next year anyway, Schowitz said, after President Donald Trump abruptly ended stimulus negotiations on Tuesday.

American households have put away a massive amount of savings this year, as they haven’t been able to spend at normal levels, suggesting that the economy can “get through” even with a delay in relief, he said. 

“It’ll be better to get the stimulus now, but as long as we get it early next year, we think the economy will be able to get through that,” the strategist said.

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