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U.S. airlines receive extra $9.5 billion in payroll support: U.S. Treasury

EconomyApr 25, 2020 08:00PM ET
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© Reuters. FILE PHOTO: American Airlines passenger planes crowd a runway where they are parked at Tulsa International Airport in Tulsa

By Jonathan Landay and David Shepardson

WASHINGTON (Reuters) - The U.S. Treasury Department said on Saturday it has released $9.5 billion in additional funds from the Payroll Support Program to U.S. air carriers, bringing to $12.4 billion the total provided to the airline sector hit hard by the coronavirus pandemic.

In total, the government has disbursed grant funds to 10 major airlines and 83 smaller carriers.

Congress approved $25 billion in grants for payroll assistance for passenger airlines. Treasury required major airlines receiving more than $100 million in assistance to repay 30% in low-interest loans over 10 years and issue warrants equal to 10% of the loan amount.

Airlines must not cut pay or jobs through Sept. 30 as a condition of the grants and are barred from buying back stock or paying dividends and face restrictions on executive compensation.

SkyWest Inc (O:SKYW) Chief Executive Chip Childs told employees on Friday the airline expects to receive $438 million from Treasury in payroll assistance.

"There is still much about the future and recovery that remains uncertain, and there is a very real possibility that we could be a smaller airline by the end of the year," he wrote in a email seen by Reuters.

The four largest U.S. carriers are receiving $19.2 billion in total out of the $25 billion - American Airlines Group Inc (O:AAL), Delta Air Lines Inc (N:DAL), United Airlines Holdings Inc (O:UAL) and Southwest Airlines Co (N:LUV).

Treasury is awarding major carriers 50% of the grant funds initially and then releasing the remainder through July.

Treasury said additional money will continue to be provided to approved applicants "on a rolling basis."

The department is still reviewing how to award $4 billion in grants to cargo carriers and $3 billion to airport contractors such as caterers.

Cargo carriers that receive $50 million or less of payroll support and contractors that receive $37.5 million or less "will not be required to provide financial instruments as appropriate compensation" for support, the department said.

The Treasury Department also published on Saturday the application form for companies deemed critical to maintaining national security seeking loans from a $17 billion fund.

The fund has been mentioned as a potential source of funds for Boeing Co (N:BA), which declined to say on Friday whether it would apply. Treasury said it wants companies to apply by May 1.

Treasury has an additional $25 billion in loans it can award to passenger airlines and $4 billion in cargo loans. Some airlines, including American, Delta and Alaska Airlines (N:ALK), have already applied.

Airlines may still need more money as U.S. air travel demand has fallen by 95% and shows no sign of improving.

On Friday, President Donald Trump said the U.S. government could pre-buy airplane tickets at a steep discount of 50% or more for travel for the next four or five years. "You infuse them with some cash. And in the meantime, we're flying the people of our country for ... a fraction of the cost," he said.

Airlines for America, a trade group representing major U.S. airlines, declined to comment.

U.S. airlines receive extra $9.5 billion in payroll support: U.S. Treasury
 

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Comments (14)
Hendry Keremata
Hendry Keremata Apr 26, 2020 8:12AM ET
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bersiap hari senin USD menguat
Steve Wilpson
Steve Wilpson Apr 26, 2020 2:44AM ET
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but really my airport is screwing me into 3 hour shifts, the seniority people got 60 days half pay/complete time off. and what is this money for? im never going to recieve a check.the only job security i have right now, is the badging office being closed so no new new-hires for the time being. any input would be appreciated
Rick Frederick
Ricky63 Apr 26, 2020 12:50AM ET
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What a time to be a flight attendant! Months of paid holiday, and a guaranteed job Forever (as the government (taxpayer) has your back)!
Andres Green
Andres Green Apr 26, 2020 12:01AM ET
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literally what they make in a month
Fairway TradeUS
Fairway TradeUS Apr 25, 2020 11:09PM ET
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No improvement?!! In air travel?!Half the country is in lockdown why would people fly?What a joke
Bulls MakeMore
Bulls MakeMore Apr 25, 2020 9:49PM ET
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Anyone else notice that it's always liberals "fact checking" conservatives (with their own biased sources), and never the other way around ... just sayin
Bret Lafrance
Bret Lafrance Apr 25, 2020 9:49PM ET
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i hear that the administration might be looking for people to test out mainlining bleach as a cure for Covid, should we tell those liberals not to fact check that one too?
Bret Lafrance
Bret Lafrance Apr 25, 2020 9:49PM ET
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This stream isnt really on topic for this site. But it might be worth saying here, I hope that what all people are learning is that our leaders and “news” sources, conservative or liberal, have strayed a long way from what our society should consider to be ethical behavior when it comes to communicating with the public, and that is to verify sources and facts, and then tell the truth. What works in business (fortunately or unfortunately) is not good practice for government, the stakes are much higher because in government lies and mistakes are paid fir with lives, not dollars.
Bret Lafrance
Bret Lafrance Apr 25, 2020 9:49PM ET
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Oh wait, i guess my last statement isnt completely true, appearantly Boeing’s lies and mistakes did result in a considerable loss of life as well. Sad
heung min son
heung min son Apr 25, 2020 8:14PM ET
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Bad timing.. kim jung un is dead.. better entry point is cominghttps://www.ccn.com/heres-how-kim-jong-uns-death-could-affect-the-u-s-stock-market/
Kilo Byte
Kilo Byte Apr 25, 2020 6:47PM ET
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Does Drumpf think he's running a gubment travel agency?  When the going gets tough, the tough gets socialist.
Gamer Turtle
GamerTurtle Apr 25, 2020 5:38PM ET
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many gets more money from staying at home instead of working. airline gets more to stay grounded than flying... fed and national debt making everyone rich
Brandon Son
Brandon Son Apr 25, 2020 4:04PM ET
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charge you for 2 lbs over but get a bailout. *** the airlines
Ryan Chae
Ryan Chae Apr 25, 2020 3:47PM ET
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HAHAHA I invested Dalta and AAL yesterday  Im win !!
James Adams
James Adams Apr 25, 2020 3:47PM ET
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The amount is a drop in the ocean. no domestic flights for months no international flights until next year
Sergio Marin
Sergio Marin Apr 25, 2020 3:47PM ET
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You're right if he bought for the long term, it's not time to buy for long term yet, BUT if he is Swing Trading, he made it though!
Patron Silver
Patron Silver Apr 25, 2020 2:02PM ET
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All US ppl on govt payroll now
Kaveh Sun
Kaveh Sun Apr 25, 2020 1:01PM ET
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Why they wouldnt allowed airliners to shutdown route at this moment? They fly 1 customer sometimes. What’s a waste of tax money.
Matthew Stork
Matthew Stork Apr 25, 2020 1:01PM ET
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Yup, total joke not to mention they are incredibly inefficient and wasteful with $
Scott Jones
Scott Jones Apr 25, 2020 12:30PM ET
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nice! adding to JETS etf pronto
Andrés Rexach
Andrés Rexach Apr 25, 2020 12:30PM ET
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they give them founds to pay salarys, it is not a good signal
Vincent TT
Vincent TT Apr 25, 2020 12:30PM ET
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Everyone seems positive about market right now.
Kaveh Sun
Kaveh Sun Apr 25, 2020 12:30PM ET
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Vincent TT trillion of dollars pump into the econ everywhere.
Vincent TT
Vincent TT Apr 25, 2020 12:30PM ET
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I am being sarcastic :)
Firass HM
Firass HM Apr 25, 2020 12:30PM ET
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Vincent TT  By the way, although i am more bearish, the bulls still have a case. Liquidity
 
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