Most major U.S. airlines including Delta, American, Southwest and United have agreed to the terms of the more than $2 trillion stimulus package passed by Congress two weeks ago, Treasury Secretary Steven Mnuchin announced today.
In a statement, Mnuchin said: “We welcome the news that a number of major airlines intend to participate in the Payroll Support Program. This is an important CARES Act program that will support American workers and help preserve the strategic importance of the airline industry while allowing for appropriate compensation to the taxpayers.”
The full list of airlines that will be taking the bailout money, according to Mnuchin, includes nearly every U.S. carrier: Alaska Airlines, Allegiant Air, American Airlines, Delta Air Lines, Frontier Airlines, Hawaiian Airlines, JetBlue Airways, United Airlines, SkyWest Airlines and Southwest Airlines. The only notable absence from the list is budget carrier Spirit Airlines but a spokesperson told Adweek that the airline expects to “agree on terms soon.”
While more than $25 billion was earmarked for airlines in the stimulus bill, the conditions of the grants were left up to Mnuchin. To the chagrin of the airlines, which wanted as few strings attached as possible, 30% of the grants will be considered low-interest loans that need to be repaid.
Additionally, airlines that take the grants will have to agree to hold off on layoffs and furloughs until at least Sept. 30 and continue to serve specific destinations, although airlines could apply to cut service.
The coronavirus crisis is expected to cost the international airline industry more than $314 billion in revenue, a drop of 55%. In the United States alone, traffic through TSA checkpoints at airports has dropped by 95%.
Included in the original stimulus is an additional $25 billion in loans, should the airlines need more assistance. It remains unclear how much individual airlines will receive, but The Washington Post reported airlines are eligible for payouts equaling their payroll costs between April and October 2019.
“The support our government has entrusted to us carries immense responsibility and an obligation that American Airlines is privileged to undertake,” said American Airlines chairman and CEO Doug Parker in a statement. American announced it would be receiving $4.1 billion in grants as well as $1.7 billion in loans.
“Conversations continue with other airlines regarding their potential participation,” Mnuchin said. “We look forward to working with the airlines to finalize the necessary agreements and disburse funds as quickly as possible.”