US Airlines Will Receive $25 Billion in Federal Aid in Bailout Package

Photo: David McNew/Stringer via Getty

Treasury Secretary Steven T. Mnuchin confirmed in a statement on Tuesday that Alaska Airlines, Allegiant Air, American Airlines, Delta Air Lines, Frontier Airlines, Hawaiian Airlines, JetBlue Airways, United Airlines, SkyWest Airlines and Southwest Airlines intend to participate in the Payroll Support Program.

“This agreement will fully support airline industry workers, preserve the vital role airlines play in our economy and protect taxpayers,” President Trump said at a White House press conference Tuesday. “Our airlines now are in good shape and they will get over a very tough period of time that was not caused by them.”

The airline bailout is part of a government $2.2 trillion economic relief package, called the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).

Airlines will receive $25 billion in payroll support and another $25 billion in loans will be distributed to passenger airlines and $10 billion in grants and loans will go to cargo airlines and aviation contractors.

Airline who that accept the allotted funds in the package meant for employees are prohibited to make staff or pay cuts Sept. 30, 2020, at which point the airlines hopes demand for travel will be back up.

Negotiations over the bailout became contentious when the Treasury insisted that larger airlines repay at least a portion of the bailout funds through a loan program, according to the New York Times. The final deal establishes that the package will be structured as part grant part loan. Mnuchin told airlines that 30 percent of the assistance would need to be repaid over a period of 10 years.

The Times noted that the outcome is a major compromise as “airlines were seeking grants with no repayment and the administration preferred loans.”

jets parked at Southern California Logistics Airport
David McNew/Stringer via Getty

As part of the financial assistance, the Treasury will be able to take stock in airlines that receive the grants.

Delta Air Lines will receive $5.4 billion in direct payroll support, and a $1.6 billion loan, CEO Ed Bastian told employees in a memo on Tuesday. Southwest will receive $3.2 billion, including $2.3 in payroll support and almost $1 billion in loans, according to a press release. American Airlines is slated to receive $5.8 billion as part of the deal, according to The Times, with $4.1 billion coming from payroll support. The airline also plans to request an additional $4.8 billion loan from the Treasury Department.

“The payroll support program recognizes the extraordinary dedication of our entire team, and importantly, sustains the critical air service being provided by our front-line team members,” Doug Parker, chief executive of American Airlines, said in a statement.

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