Passenger Airlines Receive Direct Aid Under The $ 2.2 Billion Economic Relief Program Under The Coronavirus Aid, Relief And Economic Security Act Passed Last Month To Help They Continue pay wages and benefits to employees in the coming months.
Details of the help package are expected on Tuesday.
With the coronavirus now widespread in more than 100 countries and on all continents, except Antarctica, air travel has virtually stopped.
The International Air Transport Association (Iata) predicts that airlines will lose $ 314 billion in revenue this year, 25%, almost three times the amount it predicted in a “worst case scenario” five weeks ago to have reassessed the blow to the global economy it expects.
Grants to major airlines, including American, Delta, Southwest, JetBlue and United, are likely to be subject to conditions. Wall Street Journal says airlines wanted loans canceled, but Treasury Secretary Steven Mnuchin told carriers 30% of aid should be repaid and airlines should offer warrants shares – giving the government the right to buy shares in companies – out of a portion of these funds.
Criticism was widespread after the last recession, when the American taxpayer bailed out some of the largest US banks and the auto industry, but did not profit from their eventual recovery.
In a statement, Mnuchin said, “We welcome the news that a number of major airlines plan to participate in the payroll support program. It is an important Cares Act program that will support American workers and help preserve the strategic importance of the airline industry while allowing appropriate compensation to taxpayers. “
American Airlines will receive $ 5.8 billion under the deal and plans to apply for a loan for an additional $ 4.8 billion. “The payroll support program recognizes the extraordinary dedication of our entire team and, most importantly, maintains the essential air service provided by our frontline team members,” said Doug Parker, chief executive officer of American Airlines, in a statement.