US airlines receive extra US$9.5 billion in payroll support: US Treasury
26 April, 2020
THE UNITED STATES Treasury Department said on Saturday (Oct 25) it has released US$9.5 billion in additional funds from the Payroll Support Program to US airline carriers, bringing to US$12.4 billion provided to the airline sector hit hard by the coronavirus pandemic.
In total, the federal government has disbursed grant funds to 10 major airlines and 83 smaller carriers.
Congress approved US$25 billion in grants for payroll assistance for passenger airlines. Treasury required major airlines acquiring more than US$100 million in assist with repay 30 % in low-interest loans over 10 years and issue warrants equal to 10 per cent of the loan amount.
Airlines should never cut pay or jobs through Sept. 30 as a condition of the grants and so are barred from buying back stock or paying dividends and face restrictions on executive compensation.
SkyWest Inc Chief Executive Chip Childs told employees on Friday the airline expects to get US$438 million from Treasury in payroll assistance.
"There is a very real possibility that people could be a small airlines by the end of the entire year," he wrote in a email seen by Reuters.
The four most significant US carriers are getting US$19.2 billion in total out of the US$25 billion - American Airlines Group Inc, Delta Air Lines Inc, United Airlines Holdings Inc and Southwest Airlines Co.
Treasury is awarding major carriers 50 % of the grant funds at first and then releasing the rest through July.
Treasury said more money will still be provided to approved candidates “on a rolling basis."
The department continues to be reviewing how exactly to award US$4 billion in grants to cargo carriers and US$3 billion to airport contractors like caterers.
Cargo carriers that receive US$50 million or less of payroll support and contractors that receive US$37.5 million or less "will never be necessary to provide financial instruments as appropriate compensation" for support, the department said.
Treasury comes with an additional US$25 billion in loans it could award to passenger airlines and US$4 billion in cargo loans. Some airlines, including American, Delta and Alaska Airlines, have previously applied.
Airlines may still need more money as US flights demand has fallen by 95per cent and shows no sign of improving.
On Friday, President Donald Trump said the government could pre-buy airplane tickets at a steep discount of 50per cent or even more for travel for the next 4 or 5 years. "You infuse them with some cash. And for the time being, we’re flying the people of our country for ... a fraction of the price," he said.
Airlines for America, a trade group representing major US airlines, declined to comment.
Source: www.channelnewsasia.com
TAG(s):