Airlines Reach Agreement With Treasury Department On Share Of Coronavirus Aid

Apr 14, 2020
Originally published on April 14, 2020 7:49 pm

Updated at 7:49 p.m. ET

Struggling U.S. airlines finally have a deal in principle with the Trump administration to get a share of $25 billion in federal coronavirus relief that they were supposed to get last week.

The payroll support payments will keep pilots, flight attendants, mechanics, gate agents and other employees on airline payrolls through September.

In a statement, Treasury Secretary Steve Mnuchin said the department will work with the airlines to finalize the deals "and disperse the funds as quickly as possible."

President Trump praised the deals in his daily coronavirus briefing, saying the agreements will help support the airlines and their workers while protecting 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.

Airlines have been crushed financially by an unprecedented drop in air travel demand due to the coronavirus pandemic. The number of people flying is down 95% since the beginning of March, and as a result, the bigger carriers are burning through tens of millions of dollars a day.

To prevent mass layoffs of airline employees, Congress authorized $25 billion in payroll grants, along with another $25 billion in loans, as part of the $2.3 trillion coronavirus economic relief package approved last month. The CARES Act required the Treasury Department to begin doling out the payroll support last Monday.

But after receiving the airlines' applications, Mnuchin asked the airlines to agree to pay back a portion of the aid. Some of it would be in the form of low interest loans (about 1%); the terms also demanded that the government get a small equity stake in the airlines. The airlines accepting the aid would also be prohibited from cutting employee pay, as well as mass layoffs or furloughs.

The airlines initially balked at some of those conditions. Negotiations between the airlines and the Treasury Department continued for more than a week before Mnuchin announced a deal Tuesday.

Full terms were not initially released but the airlines will pay back about 30% of the aid with interest, and federal government will get equity stakes in the airlines.

American, United, Delta, Southwest, JetBlue, Alaska and Frontier are among the airlines agreeing to the terms. Negotiations continue with others.

Flight attendant and pilot groups were critical of the plan.

Association of Flight Attendants president Sara Nelson said, "Unfortunately, Secretary Mnuchin decided to play games with this aid, rather than deliver it in the way Congress intended in the bipartisan deal. Now we must fight to keep aviation intact to protect our industry and ensure our economy lifts off again when the virus is under control."

"We are pleased that a number of airlines have decided to participate in the Payroll Support Program, despite the constraints placed on this grant funding by the Treasury Department," said Capt. Joe DePete, president of the Air Line Pilots Association. "Unfortunately, Treasury is undermining the intent of the CARES Act by treating a portion of the grants designed to protect jobs not as grants, but as loans, which will make it harder to stop layoffs and slow the recovery."

The chairman of the House Transportation Committee, Rep. Peter DeFazio, D-Ore., said, "I strongly believe what Congress laid out in this provision of the CARES Act—to put workers first—should be the model for any industry-specific relief going forward."

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