Treasury distributes $2.9 bln among airlines

The Treasury Department has given airlines a lifeline of $2.9 billion to prevent job cuts.

Saleha Mohsin reported the news for Bloomberg:

The U.S. Treasury Department disbursed $2.9 billion to passenger airlines in the first round of payroll assistance to an industry suffering financially from a pandemic-induced shutdown.

Six airlines including American Airlines Group Inc., Delta Air Lines Inc., Southwest Airlines Co. and United Airlines Holdings Inc. have struck agreements with the federal government for aid, the Treasury Department said in a statement late Monday.

The assistance that has been handed out so far went to two “major” airlines and 54 smaller passenger carriers, the department said. More payments will be sent out on a rolling basis, it said.

David Shepardson from Reuters wrote:

Treasury said on Monday it had finalized 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 U.S. travel demand fall by 95%.

Southwest said it would receive half of the $3.2 billion payroll award immediately and the remainder in installments during 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 major airlines represent nearly 95% of U.S. 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 Hill’s John Bowden noted:

Treasury Secretary Steven Mnuchin added in a statement accompanying the release that the PSP was “critical” to supporting both American workers and companies during the outbreak, which has largely shuttered nonessential businesses in the U.S. and elsewhere and severely cut down on the number of Americans flying domestic and international flights.

“The Payroll Support Program is critical to supporting American workers and preserving our airline industry, which is a vital part of the U.S. economy,” said Mnuchin. “We continue to work quickly to deliver this needed relief.”

The PSP was passed as a part of the CARES Act, a stimulus package passed by Congress and signed by President Trump last month in response to the coronavirus outbreak.

Several airlines including Virgin Australia have been forced into voluntary administration amid the outbreak due to severely reduced profits, which are expected to last for months.