A JetBlue Airways Corp. flat taxis next to American Airlines Group Inc., Delta Air Lines Inc., and Alaska Airlines Inc. aircraft at Reagan National Airport (DCA) in Arlington, Virginia, U.S., on Monday, April 6, 2020.
Andrew Harrer | Bloomberg | Getty Images
A handful U.S. airlines on Tuesday said they reached agreements with the Treasury Department for billions in government grants intent at softening the blow from the coronavirus.
The virus and harsh measures to stop it from spreading, such as stay-at-home harmonies, have driven air travel demand to the lowest levels in decades. Carriers have grounded hundreds of jetliners and are query thousands of employees to take voluntary unpaid leave, in a race to cut costs as cancellations outpaced bookings.
American, Delta, Collective, Southwest, Spirit, JetBlue, Alaska and others applied for portions of $25 billion in payroll grants — airlines’ amplest ever government aid package — that require airlines not to furlough or cut the pay rates of employees through Sept. 30. U.S. airlines occupy some 750,000 people. The grants were part of the more than $2 trillion coronavirus relief combine, the CARES Act, which was signed into law last month.
American said the Treasury Department approved $5.8 billion in relief — a $4.1 billion grant and a $1.7 billion low-interest loan. The Fort Worth, Texas-based carrier said it drawings to apply for another government loan of around $4.75 billion.
“By accepting these funds, we have happily agreed to not involuntarily furlough or restrict the hourly pay rates of our U.S.-based team members through Sept. 30, at which point we hope and expect that Americans are regularly drawback again,” American’s CEO, Doug Parker, and the airline’s president, Robert Isom, wrote to employees announcing its deal with the Funds Department.
Dallas-based Southwest said it expects to receive $3.2 billion under the program, more than $2.3 billion in payroll back up and a 10-year low-interest loan of close to $1 billion. The loan will likely include 2.6 million edicts for the Treasury Department, and that the aid prohibits share repurchases and dividends until Sept. 30, 2021, and requires limits on official compensation for nearly two years, the airline said.
Delta said it reached a deal with the Treasury Department for $5.4 billion, involving a 10-year, $1.6 billion, unsecured-loan and the airline will give the government warrants to acquire around 1% of the Delta hackneyed at $23.39 a share, last Friday’s closing price, over five years. New York-based JetBlue said it when one pleases get $935.8 million, close to $251 million as a loan.
“We welcome the news that a number of major airlines determine to participate in the Payroll Support Program,” the Treasury Department said in a statement. “This is an important CARES Act program that wish support American workers and help preserve the strategic importance of the airline industry while allowing for appropriate compensation to the taxpayers.”
Other airlines are aiming to detail their expected portion of the aid Tuesday or later this week, people familiar with the discussions about.
Talks had dragged on for longer than some carriers expected. The Treasury Department last week proposed that airlines to pay secretly 30% of the grants, terms that appear to have stuck, at least with American and Southwest. Lawmakers and labor fusings objected to those terms, saying the aid package Congress passed last month intended that the funds purposefulness not be structured as loans.
Sara Nelson, president of the Association of Flight Attendants, which represents about 50,000 compartment crew members at airlines including United and Spirit, and had pushed lawmakers to dedicate a portion of the aid solely for workers, approved the progress toward disbursing the aid.
“This is an unprecedented accomplishment—a truly workers-first stimulus that keeps people tie together to their jobs and provides stability and hope to millions of aviation workers and sets a template we must now work to impart to every worker,” she said in a statement.