US airlines receive billions in CARES support
Airlines across the US have applied for a share of the $25 billion in payroll grants afforded to the industry as part of the Payroll Support Program (PSP). This was established following the Treasury Department's $2 trillion Coronavirus Aid, Relief and Economic Security Act, or CARES.
With travel restrictions leaving airlines scrambling to cut costs in an attempt to stay afloat, this package will undoubtedly help ease financial pressures for the time being.
Airlines like American, United, Delta, JetBlue, Spirit, Alaska and Southwest have already applied for funding as part of the scheme, which will require airlines to not cut pay rates or furlough employees through to September 30th. Currently, US airlines employee over 750,000 people. The US Treasury Department has already approved American Airlines' $5.8 billion in assistance, which you can read about here.
Southwest Airlines said it expects to receive $2.3 billion in pay roll support and just under $1 billion through a 10-year low-interest government loan, amounting to $3.2 billion in support.
Similarly, Delta reached a deal for $5.4 billion in support in which they agreed to warrant a government's acquisition of 1% of their stock at $23.39 a share if necessary. Restrictions on share-buybacks and dividends will be made for airlines receiving these payments.
Airlines receiving these payroll support payments and low-interest government loans will have to pay back 30% of the grants when seeking over $100 million, said the Treasury Department.
“We welcome the news that a number of major airlines intend to participate in the Payroll Support Program,” stated the Treasury Department.
These grants focus heavily on the workers and will hopefully keep these airlines in a position to resume a somewhat normal operations schedule as coronavirus restrictions are slowly lifted.