Treasury Secretary Steven Mnuchin said Tuesday that 10 airlines, including the four major U.S. carriers, signaled that they plan to accept grants to cover employee payroll and benefits, almost three weeks after a coronavirus stimulus was enacted.
Under the stimulus law, Treasury was supposed to start cutting grant checks on April 6, but airlines and the administration have been sparring over the extent to which "warrants" or other financial stakes may be required for airlines to access that money, along with what some carriers characterized as a confusing application process.
Mnuchin said Alaska Airlines, Allegiant Air, American Airlines, Delta Air Lines, Frontier Airlines, Hawaiian Airlines, JetBlue Airways, United Airlines, SkyWest Airlines and Southwest Airlines had all agreed to participate. Congress created the program with up to $29 billion in grants for airlines to use for paying employees, plus $3 billion for contractors, through the CARES Act in March.
"Conversations continue with other airlines regarding their potential participation," Mnuchin said. "Treasury is also working to review and approve applications for smaller passenger air carriers as quickly as possible and will provide further guidance for cargo carriers and contractors very soon. We look forward to working with the airlines to finalize the necessary agreements and disburse funds as quickly as possible.”
President Donald Trump hailed the agreement during a Tuesday press conference.
"This agreement will fully support the airline industry workers and preserve the vital role airlines play in our economy and protect taxpayers," Trump said. "Our airlines are now in good shape and they will get over a very tough period of time that was not caused by them."
Additional details on conditions accompanying the grants were not provided by Treasury, but some airlines have begun to release details of their terms.
American Airlines said it would accept $4.1 billion in direct grants, as well as a low interest rate loan of $1.7 billion. The carrier said it would further seek $4.75 billion in a separate loan from Treasury and promised further financial details on the agreement, including the number of stock warrants included, in a forthcoming Securities and Exchange Commission filing.
Southwest Airlines said it would accept $3.2 billion through the payroll program, including $2.3 billion in direct support and a nearly $1 billion loan. It said the loan would be a low-interest, ten-year arrangement that includes approximately 2.6 million stock warrants for Treasury.
Frank Benenati, a spokesperson for United, said the carrier anticipates "completing the final agreements with the Treasury Department in the next few days."
"These funds will cover a portion of our pay and benefits costs through September 30, and we are thankful for the support provided to our employees and their families by the CARES Act," Benenati said.
A spokesperson for Delta said it did not have a comment "just yet."
Both carriers said they had agreed to conditions on stock buybacks, dividends and executive compensation, as well prohibitions on workforce and pay reductions, as part of the deal, but further details were not provided.
Sara Nelson, president of the Association of Flight Attendants-CWA, hailed those restrictions on corporate practices as a major victory and urged that the program serve as a model for similarly distressed sectors.
“This is an unprecedented accomplishment — a truly workers-first stimulus that keeps people connected to their jobs and provides stability and hope to millions of aviation workers and sets a template we must now work to extend to every worker,” Nelson said in a statement. “With our jobs, pay and benefits protected, aviation workers have the strength we need to fight forward for ourselves and all workers. And we must fight.”
Joe DePete, president of the Air Line Pilots Association, welcomed the agreement even as he warned the Treasury Department is "undermining the intent of the law by treating a porting of the grants designed to protect jobs as loans" and potentially slowing the industry's recovery.
"In spite of this, we remain optimistic that more carriers will avail themselves of this funding – and that Congress will seek to overturn the constraints placed on this worker assistance program," DePete said.
Sen. Roger Wicker (R-Miss.), chairman of the Senate Commerce Committee, hailed the agreement as “welcome news” that would help the industry survive the pandemic.
“This assistance will help keep pilots, flight attendants, gate agents, and mechanics in their jobs during the tremendously difficult time for the air transportation industry, and it will provide vital relief until demand for air travel returns,” Wicker said in a statement, adding final negotiations on the terms of the agreement continue.
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Airlines ink agreement in principle on billions in payroll assistance - POLITICO
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