Major US airlines line up; split $25 billion in payroll aid
The Treasury Department said Tuesday that the nation’s major airlines have tentatively agreed to terms for $25 billion in federal aid to pay workers and keep them employed through September.
The assistance will include a mix of cash and loans, with the government getting warrants that can be converted into small ownership stakes in the leading airlines.
The airlines did not want to give up equity, but Treasury demanded compensation for taxpayers. The airlines have little leverage — their business has collapsed as the COVID-19 pandemic reduces air travel to a trickle and they face mass layoffs without the federal aid.
The nation’s six biggest airlines — Delta, American, United, Southwest, Alaska and JetBlue — along with four smaller carriers have reached agreements in principle, and the Treasury Department said talks were continuing with others. Treasury Secretary Steven Mnuchin said the department would work with the airlines to finalize deals “and disburse funds as quickly as possible.”
President Donald Trump — perhaps mindful of criticism that the government was bailing out a previously profitable industry — said the deals will support airline workers and protect taxpayers.
“Our airlines are now in good shape, and they will get over a very tough period of time that was not caused by them,” Trump said.
The payroll aid is roughly based on each airline’s spending on wages and benefits from April through September 2019,
American Airlines said Treasury approved $5.8 billion for the airline — a $4.1 billion grant and a $1.7 billion low-interest loan. CEO Doug Parker called it “fantastic news,” and “we now believe we have the financial resources necessary to help us withstand this crisis.”