US announces $2.9bn lifeline for airlines staff

The United States Treasury Department has disbursed $2.9bn in initial payroll assistance to two leading passenger airlines and 54 smaller passenger carriers, while it finalised grant agreements with six top airlines, it said on Monday.

The Treasury is initially giving large airlines 50 percent of funds awarded and releasing the rest in a series of payments.

In total, Treasury is awarding US passenger airlines $25bn in funds earmarked for payroll costs.

Major airlines must repay 30 percent of the funds in low-interest loans and grant Treasury warrants equal to 10 percent of the loan amount, while airlines receiving $100m or less do not need to repay any funds or issue warrants to the government.

Treasury said on Monday it had finalised grant agreements with Allegiant Air, American Airlines Group Inc, Delta Air Lines Inc, Southwest Airlines Co, Spirit Airlines Inc, and United Airlines Holdings Inc.

Air carriers have been devastated by the coronavirus pandemic and seen the US travel demand fall by 95 percent.

Southwest said it would receive half of the $3.2bn payroll award immediately and the remainder in instalments in May, June and July.

Separately, Treasury said Alaska Airlines, Frontier Airlines, Hawaiian Airlines, JetBlue Airways Corp and SkyWest Airlines had also indicated that they planned to participate. The 12 top airlines represent nearly 95 percent of US airline capacity.

Airlines receiving funds cannot lay off employees before September 30 or change collective bargaining agreements and must agree to restrictions on buybacks, executive compensation and dividends.

Treasury is now considering separate requests for additional assistance from another $25bn loan fund for passenger airlines. United said on Monday it was seeking $4.5bn in loans from the programme, while American said last week it was applying for a $4.75bn loan under that programme, and Alaska and Horizon said they were applying for $1.1bn in loans.

United said on Monday it expected to cut passenger capacity by 90 percent in June.

Treasury is still considering how to award $4bn in payroll assistance to cargo carriers and $3bn to airport contractors like plane caterers.

Estimated global airline losses from the coronavirus pandemic have climbed to $314bn, 25 percent more than previously forecast, the International Air Transport Association said last week.