Major airlines and the Treasury Department have reached terms for a $25 billion coronavirus bailout to prevent layoffs after a severe plunge in demand.
The funds, approved last month by Congress as part of a more than $2 trillion stimulus bill, will be distributed to companies that agree not to furlough workers before Oct. 1.
American Airlines said Tuesday in a statement that it will receive $5.8 billion — including a $4.1 billion grant and a $1.7 billion low-interest loan.
Other airlines did not immediately specify the amounts they will receive under the so-called Payroll Support Program, set up to offset a more than 90 percent dip in passengers.
The Treasury Department did not immediately specify terms reached with companies, but said funds are expected to also go to Alaska Airlines, Allegiant Air, Delta Air Lines, Frontier Airlines, Hawaiian Airlines, JetBlue Airways, United Airlines, SkyWest Airlines and Southwest Airlines.
“This is an important CARES Act program that will support American workers and help preserve the strategic importance of the airline industry while allowing for appropriate compensation to the taxpayers,” Treasury Secretary Steve Mnuchin said in a statement.
“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.”
Debate over the airlines bailout dragged late into Senate stimulus bill negotiations last month, with disagreement on whether the funds should be structured as loans or grants, and what strings should be attached.
The airlines’ Payroll Support Program is different from the $350 billion Paycheck Protection Program, which helps small businesses up to 500 employees with loans that are converted into grants if firms retain their workers through the crisis. The small-business funds are expected to run out in days, and a legislative impasse is stalling a White House request for an additional $250 billion.
In the past three weeks, US companies have fired, laid off or furloughed at least 17 million people — an unprecedented spike in joblessness as local governments order businesses closed to prevent the spread of COVID-19.
The $25 billion for airlines was a specific set-aside in the bill, but American Airlines said it would seek to double dip from a larger $500 billion loan program administered by the Treasury Department.
“American expects to separately apply for a loan from the U.S. Treasury of approximately $4.75 billion,” the airline said.