- US airlines and the Treasury Department reached an agreement in principle on Tuesday over up to $25 billion in payroll assistance, part of the $50 billion coronavirus bailout for the airline industry.
- American Airlines said it would receive $5.8 billion in payroll assistance under the CARES Act, while Southwest Airlines said it would receive $3.2 billion.
- Alaska Airlines, Allegiant Air, Delta Air Lines, Frontier Airlines, Hawaiian Airlines, JetBlue Airways, United Airlines, and SkyWest Airlines were included in the agreement, but did not immediately announce figures.
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Major US airlines and the US Treasury Department reached a deal on Tuesday over billions of dollars in coronavirus aid.
The coronavirus bailout package, the CARES Act, contains two provisions for aid to the airline industry, split into two $25 billion funds for passenger airlines: Payroll grants, essentially aid for airline workers paid through their employers, and loans, which are intended to help inject liquidity into the struggling firms.
Tuesday’s agreement surrounded the payroll grants. The CARES Act budgeted up to $25 billion in grants for passenger airlines, and $4 billion for cargo airlines. An additional $3 billion is set aside for airline contractors.
According to a statement from the Treasury Secretary Steven Mnuchin, Alaska Airlines, Allegiant Air, American Airlines, Delta Air Lines, Frontier Airlines, Hawaiian Airlines, JetBlue Airways, United Airlines, SkyWest Airlines, and Southwest Airlines all applied for the grants.
American Airlines, in a press release and a separate memo to employees, said that it had received $5.8 billion in payroll assistance. The amount will be split into a $4.1 billion grant, and a $1.7 billion loan.
Southwest announced that it would receive about $3.2 billion in payroll support, including a $1 billion loan.
The Treasury had suggested that airlines will be required to pay back 30% of the grants, effectively making them loans. Labor unions and lawmakers objected to those terms, arguing that the money was intended for the benefit workers in the struggling industry, not the airlines themselves, and that repayment requirement could discourage airlines from applying for the aid.
The Treasury also said it would take equity in airlines receiving aid. Details were not immediately available.
Under the terms of the bailout, airlines receiving payroll aid are prohibited from furloughing or laying off workers before September 30, 2020. They are also banned from buying back stock or paying dividends to shareholders until September 30, 2021. Executive compensation is also limited.
This is a developing story. Check back for more.