Major airlines line up to split $25 billion in payroll aid
The nation’s biggest airlines have tentatively agreed to terms for $25 billion in government aid to pay workers and avoid massive layoffs in an industry that has been slammed by the coronavirus pandemic.
The assistance will include a mix of cash and loans, with the government getting warrants that can be converted into small ownership stakes in the leading airlines.
Ten airlines — including Delta, American, United and Southwest – fell in line after objecting to some of the Treasury Department’s demands. Treasury Secretary Steven Mnuchin said Tuesday that the department would work to finalize the deals and hand over the money as quickly as possible. He said talks were continuing with other carriers.
The airlines entered 2020 riding a decade-long hot streak in which together they earned tens of billions of dollars due to strong travel demand. They bought new planes, enriched shareholders, and hired thousands more workers.
That streak came to a crashing end in just a few weeks, as governments restricted travel to slow the spread of the new coronavirus, and people feared contracting the illness on a plane. Air travel ground to a near complete halt. Airlines cut thousands of flights, and those that remain often carry just a few passengers.
With the payroll grants, airlines and their workers got special treatment in last month’s $2.2 trillion measure designed to help businesses and workers get through the pandemic, which has hit every sector of the economy.
President Donald Trump — perhaps mindful of criticism that the government was bailing out a previously profitable industry — said the deals will support airline workers and protect taxpayers.
“Our airlines are now in good shape, and they will get over a very tough period of time that was not caused by them,” Trump said.
The payroll aid is roughly based on each airline’s spending on wages and benefits from April through September 2019.
American Airlines said Treasury approved $5.8 billion for the airline — a $4.1 billion grant and a $1.7 billion low-interest loan.