Risk & Compliance

Airlines Meet Deadline for Payroll Grant Program

The $25 billion program is aimed at helping U.S. carriers weather the drastic drop in demand caused by the coronavirus crisis.
Matthew HellerApril 3, 2020

U.S. airlines including American Airlines, Delta Air Lines, and JetBlue Airways met Friday’s deadline to apply for part of a $25 billion payroll grant program aimed at helping carriers weather the economic storms of the coronavirus crisis.

The program is a special carveout for the airline industry from the $2 trillion emergency relief legislation passed by Congress last week.

The grants are meant to protect airline jobs for the next six months, covering the amount that carriers paid in salaries and benefits in the second and third quarters of 2019 even as they drastically reduce flight schedules to match a dramatic drop in demand.

American, with the largest number of full-time employees at 133,700 in 2019, was among those that applied on Friday. It has said it would seek up to $6 billion in grants and $6 billion in government loans under a separate $32 billion funding option for the sector.

Delta also applied, while expressing concerns that the grant funds “alone are not nearly enough.” The airline expects a 90% decline in second-quarter revenue.

JetBlue told employees it “may not get enough to cover pay and benefits at the level you see when we are flying at full capacity.”

As Reuters reports, “Passenger airlines are weathering a dramatic drop in travel demand, while cargo carriers are suffering from disruption to global supply chains and high-margin business-to-business demand, even as ground-package delivery services increase.”

In their applications for grants, airlines must propose financial instruments such as warrants or equity options to compensate taxpayers for the money but labor unions are concerned that would give the government a stake in airlines.

Equity compensation “effectively renders the payroll grants a poison pill that will cost us our jobs,” a group of unions representing flight attendants warned.

United Airlines and Southwest Airlines were also expected to apply.