US airlines annoyed with bailout conditions
US airlines are peeved at the $25 billion financial aid offered by the treasury department, claiming they are victims of a classic bait and switch scheme.
While the money expected is on the table, large airlines will have repay 30% of any grant within the next five years.
That was not part of any expected deal, they claim.
"We believe the law indicated that the Direct Payroll Assistance funding was to be only in grants — which is considerably more effective for our employees — and not a combination of grants and loans," said trade group Airlines for America.
Airline unions are also irked.
"Secretary Mnuchin owes the more than two million workers supported by the aviation industry an explanation," Julie Hedrick, national president of the Association for Professional Flight Attendants.
The administration says airlines were informed any hand-out could have strings attached.
"The bipartisan law specifically states that the Secretary may receive warrants, options, debt securities, or other financial instruments to provide compensation for American taxpayers," said Brent McIntosh, undersecretary of Treasury’s international affairs unit.
Small regional carriers are exempt from paying back loans.
Under the terms, airlines that accept grants may not lay off workers until at least September 30.
"It is our objective to make sure, as I have said, that this is not a bailout, but to make sure that airlines have the liquidity to keep their workers in place," treasury secretary Steven Mnuchin told CNBC.
Airlines are hoping to renegotiate the terms but they likely won’t have any support from consumers, if they continue using job lay-offs as a bargaining chip.
The top six airlines – United, American, Southwest Airlines, Delta Air Lines, JetBlue Airways and Alaska Air — paid out $27 billion last year in salary and benefits, according to the US Bureau of Transportation Statistics.
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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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