WASHINGTON: The US Treasury Department said on Monday it had disbursed US$2.9 bil (RM12.7 bil) in initial payroll assistance to 54 smaller passenger carriers and two major passenger airlines, while it finalised grant agreements with six major airlines.
The Treasury is initially giving major airlines 50% of funds awarded and releasing the rest in a series of payments. In total, the Treasury is awarding US passenger airlines US$25 bil in funds earmarked for payroll costs. Major airlines must repay 30% of the funds in low-interest loans and grant Treasury warrants equal to 10% of the loan amount, while airlines receiving US$100 mil or less do not need to repay any funds or issue warrants to the government.
The 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 US travel demand fall by 95%.
Southwest said it would receive half of the US$3.2 bil payroll award immediately and the remainder in instalments during May, June and July.
Separately, the Treasury said Alaska Airlines, Frontier Airlines, Hawaiian Airlines, JetBlue Airways Corp and SkyWest Airlines had also indicated that they planned to participate. The 12 major airlines represent nearly 95% of US airline capacity.
Airlines receiving funds cannot lay off employees before Sept 30 or change collective bargaining agreements and must agree to restrictions on buybacks, executive compensation and dividends.
The Treasury is now considering separate requests for additional assistance from another US$25 bil loan fund for passenger airlines. United Airlines said on Monday it was seeking US$4.5 bil in loans from the programme, while American Airlines said last week it was applying for a US$4.75 bil loan under that program, and Alaska Airlines and Horizon Air said they were applying for US$1.1 bil in loans.
United Airlines said on Monday it expected to cut passenger capacity by 90% in June.
The Treasury is still considering how to award US$4 bil in payroll assistance to cargo carriers and US$3 bil to airport contractors like airplane caterers.
Estimated global airline losses from the coronavirus pandemic have climbed to US$314 bil, 25% more than previously forecast, the International Air Transport Association said last week. – April 21, 2020, Reuters
