The Payroll Support Program for U.S. airlines appears to have gotten off the ground as several carriers announced they had reached agreements with the Treasury Department for billions of dollars in grants.
The $25 billion program is a special carveout for the airline industry from the $2 trillion CARES Act passed by Congress to help carriers weather the economic storms of the coronavirus crisis.
The deadline for airlines to apply for aid was April 3 but payments were delayed as airlines negotiated with Treasury over what strings, if any, should be attached to grants. The government demanded, among other things, that airlines repay up to 30% as a low-interest loan.
According to CNN, airlines have agreed, in exchange for accepting the funds, to prohibitions on stock buybacks and layoffs, and limits on executive compensation. They must also provide a minimum level of service to the destinations they currently serve.
American Airlines, which has the largest number of employees, said Tuesday it expects to receive $5.8 billion from the program, including $4.1 billion as a grant and $1.7 billion as a loan.
“With this level of assistance, we now believe we have the financial resources necessary to help us withstand this crisis and be in position to serve the traveling public when they are ready to start flying again,” American CEO Doug Parker and President Robert Isom wrote employees in an internal message.
Other beneficiaries include Southwest Airlines, which said it expects to receive $3.2 billion, including nearly $1 billion as a 10-year loan secured with stock warrants and requiring limits on executive pay for nearly two years. Delta said it reached a deal with Treasury for $5.4 billion, including a 10-year, $1.6 billion, unsecured loan.
Sara Nelson, president of the Association of Flight Attendants, applauded the progress toward disbursing the money.
“This is an unprecedented accomplishment — a truly workers-first stimulus that keeps people connected to their jobs and provides stability and hope to millions of aviation workers and sets a template we must now work to extend to every worker,” she said.
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