Airlines reach deal with treasury department for bailout cash
US airlines have reluctantly agreed to the treasury department’s bailout terms, including loans which must be repaid.
Ten airlines are taking part in the federal government’s $25 billion Payroll Support Program.
They are Alaska Airlines, Allegiant Air, American Airlines, Delta Air Lines, Frontier Airlines, Hawaiian Airlines, JetBlue Airways, United Airlines, SkyWest Airlines and Southwest Airlines, according to a statement from treasury secretary Steven Mnuchin.
American Airlines announced it agreed a $5.8 billion package, which includes a $1.7 billion loan to be repaid.
It may also apply for a further loan of $4.75 billion.
Southwest Airlines will receive $2.3 billion in payroll support and a low-interest loan of nearly $1 billion.
"We applaud the quick action by the US department of treasury to try to keep businesses open and people on the job," Southwest chairman and CEO Gary Kelly said.
"This is an important CARES Act program that will support American workers and help preserve the strategic importance of the airline industry," Mnuchin said.
All airlines receiving money must guarantee no job cuts until September and there are restrictions on stock buybacks and executive pay.
Airlines had baulked at the inclusion of repayable loans as a condition of the bailout.
They had vowed to fight it but Mnuchin would not budge.
It ended up a ‘take it or leave it’ offer that airlines just couldn’t do without.
It is made up of 70% in direct grants and 30% in low-interest loans which must be repaid.
It also includes the handing over of warrants for part of the loan amounts which potentially gives the government a minority share of airlines’ stock.
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Editor for TravelMole North America and Asia pacific regions. Ray is a highly experienced (15+ years) skilled journalist and editor predominantly in travel, hospitality and lifestyle working with a huge number of major market-leading brands. He has also cover in-depth news, interviews and features in general business, finance, tech and geopolitical issues for a select few major news outlets and publishers.
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