Ten domestic airlines have agreed in principle with the Treasury Department to receive government aid to help the embattled industry combat the effects of the coronavirus.
The $25 billion in aid is called the Payroll Support Program and is part of the $2.2 trillion stimulus package known as the CARES Act signed into law last month by President Trump. This part of the aid was for the airlines to continue paying its employees, with the proviso that carriers not fire or furlough employees before Sept. 30, 2020.
Several airlines and the Treasury began confirming the deals on Tuesday night. Terms of the agreements were not released, but in a statement from American Airlines it appears that the government got its demand that of the $25 billion in grants some 30 percent must be paid back.
There is still another pool of $25 billion from which the airlines can apply for straight loans.
The airlines who agreed to terms include American, Alaska Airlines, Allegiant Air, Delta Air Lines, Frontier Airlines, Hawaiian Airlines, JetBlue Airways, United Airlines, SkyWest Airlines and Southwest Airlines.
The industry is in dire need of the financial boost. The global pandemic has brought air travel to a virtual standstill, with the Transportation Security Administration reporting a 90 percent drop in the number of passengers being screened at U.S. airports.
In a statement, American said it will receive $5.8 billion in financial assistance from the Payroll Support Program created through the CARES Act. The funds will come in two forms: a direct grant of $4.1 billion, and a low-interest rate loan of $1.7 billion. Thirty percent of $5.8 billion is $1.7 billion.
In addition to the $5.8 billion, American said it expects to separately apply for a loan from the U.S. Treasury of approximately $4.75 billion.
"The Payroll Support Program recognizes the extraordinary dedication of our entire team, and importantly, sustains the critical air service being provided by our frontline team members," American CEO Doug Parker said in a statement. "Those team members are our heroes, and we are elated that this program will enable us to continue to employ and pay our team while they fly through this period of depressed consumer demand. This program would not have come about without the collaborative, bipartisan approach that was undertaken, and we applaud the administration, Secretary Mnuchin, Secretary Chao and congressional leadership for their efforts and vision."
In addition to American Airlines, Southwest said it expects to receive $3.2 billion under the program, more than $2.3 billion in payroll support and a 10-year low-interest loan of close to $1 billion, according to CNBC.
Delta said it reached a deal with the Treasury Department for $5.4 billion, including a 10-year, $1.6 billion unsecured loan.
"We welcome the news that a number of major airlines intend to participate in the Payroll Support Program," Treasury Secretary Steve Mnuchin said in a statement. "This is an important CARES Act program that will support American workers and help preserve the strategic importance of the airline industry while allowing for appropriate compensation to the taxpayers."
"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," said Sara Nelson, president of the Association of Flight Attendants, which represents about 50,000 cabin crew members in the U.S.
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