US Treasury sends first airline aid payments
The Trump administration on Monday sent out the first payments meant to help save airline jobs as the industry is ravaged by the effects of the coronavirus pandemic.
The US Treasury sent the first $2.9 billion of the plan -- agreed upon last week after hard-fought negotiations -- to "two major airlines and 54 smaller passenger air carriers." Airlines participating in the program make up almost 95 percent of US airline capacity, the department said in a statement.
The industry directly employs more than 750,000 people in the US. The plan was adopted as part of a larger $2.2 trillion relief package and offers $25 billion to airlines to retain their employees until September 30.
The companies are also able to access long-term loans and low rates. Allegiant Air and Spirit Airlines were among those to finalize agreements with the Treasury, the statement said, in addition to the country's four biggest airlines: American Airlines, Delta Air Lines, Southwest Airlines and United Airlines.
Alaska Airlines, Frontier Airlines, Hawaiian Airlines, JetBlue Airways and SkyWest Airlines have also said they plan to participate, according to the statement, which added that the department had received "hundreds" of applications to join.
The administration has not divulged the details of the agreement, though Treasury Secretary Steven Mnuchin has said the plan provides for "appropriate compensation to the taxpayers."
"All funds provided under the program can be used only for the continuation of payment of employee wages, salaries, and benefits," Monday's statement said.
Sources familiar with the matter told AFP last week that the airlines would owe back 30 percent of what they receive. The federal government will in return receive warrants -- financial instruments that can be turned into stock shares and whose price has not been specified but is usually fixed in advance and should represent 10 percent of the value of the aid that each company gets.
That means the state will become a minority shareholder in each of the signatory airlines. United Airlines indicated in financial documents filed Monday that they intend to borrow up to $4.5 billion from the Treasury as part of the five-year rescue plan.
The company also said it would receive $5 billion as part of the employment aid program -- $3.5 billion in assistance and the rest in the form of loans over the next 10 years with an interest rate of one percent in the first five years and two percent over the next five.