US airlines get payroll injection of US$9.5b from federal fund
THE US Treasury Department has released US$9
THE US Treasury Department has released US$9.5 billion in additional funds from the Payroll Support Programme to US airlines, raising the total provided to ten major airlines and 83 smaller carriers to $12.4 billion, to help them ride out the coronavirus shutdown.
Congress approved $25 billion in grants for payroll assistance for passenger airlines. Treasury required major airlines receiving more than $100 million in assistance to repay 30 per cent in low-interest loans over ten years and issue warrants equal to ten per cent of the loan amount.
Airlines are not allowed to cut pay or jobs through September 30 as a condition of the grants, and are barred from buying back stock or paying dividends and face restrictions on executive compensation, reported Reuters.
The four largest US carriers are receiving $19.2 billion in total out of the $25 billion - American Airlines Group Inc, Delta Air Lines Inc, United Airlines Holdings Inc and Southwest Airlines Co.
Treasury is awarding major carriers half of the grant funds initially and then releasing the remainder through July.
Treasury said additional money will continue to be provided to approved applicants 'on a rolling basis'.
The department is still reviewing how to award $4 billion in grants to cargo carriers and $3 billion to airport contractors such as caterers.
Cargo carriers that receive $50 million or less of payroll support and contractors that receive $37.5 million or less 'will not be required to provide financial instruments as appropriate compensation' for support, the department said.
The Treasury Department also published the application form for companies deemed critical to maintaining national security seeking loans from a $17 billion fund, which is a potential source of funds for Boeing Co. Treasury said it wants companies to apply by May 1.
Treasury has an additional $25 billion in loans it can award to passenger airlines and $4 billion in cargo loans. Some airlines, including American, Delta and Alaska Airlines, have already applied.
Airlines may still need more money as US air travel demand has plunged by 95 per cent and shows no sign of improving.
President Donald Trump said the US government could pre-buy airplane tickets at a steep discount of 50 per cent or more for travel for the next four or five years. 'You infuse them with some cash. And in the meantime, we're flying the people of our country for... a fraction of the cost,' he said.