US airlines and government reach agreement on coronavirus aid

Ten American carriers have applied for parts of $25bn in payroll grants

Jets of US carrier are parked on a runway at the Pittsburgh International Airport in Pennsylvania. US Treasury Secretary Steven Mnuchin and major US airlines reached an agreement on April 14, 2020, on aid to pay workers and avoid bankruptcies in an industry that employs 750,000 people amid the coronavirus pandemic. AFP

Ten US airlines reached an agreement with the government to accept financial support from $58 billion (Dh213bn) allocated for carriers out of the $2.2 trillion coronavirus stimulus approved last month, according to the Treasury Department.

"We welcome the news that a number of major airlines intend to participate in the Payroll Support Program," Treasury Secretary Steven Mnuchin said in a statement.

The airlines which include Alaska Airlines, Allegiant Air, American Airlines, Delta Air Lines, Frontier Airlines, Hawaiian Airlines, JetBlue Airways, United Airlines, SkyWest Airlines and Southwest Airlines applied for parts of $25bn in payroll grants.

"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," Mr Mnuchin said.

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The payroll grants programme requires airlines to agree not to furlough or cut the pay rates of employees through September 30. It also require carriers that take part to pay back 30 per cent of the grants, according to some media reports.

Airlines worldwide are fighting a severe cash shortage as the pandemic triggers country lockdowns and crushes air travel demand. Carriers are taking unprecedented measures to preserve their existence with dramatic capacity reductions and preserving cash as revenue withers.

The International Air Transport Association (Iata) estimates airlines will lose $314bn in revenue this year, 55 per cent less than 2019, due to the coronavirus impact and will require $200bn in government aid.

Iata has urged governments to quickly implement pledges of financial support for carriers, warning that 25 million jobs are at risk in a scenario of three months of travel restrictions combined with the plunge in air travel demand.

Mr Mnuchin said other airlines may join the program, and the department is reviewing applications for smaller passenger air carriers.

“Conversations continue with other airlines regarding their potential participation," the secretary 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," he added. "We look forward to working with the airlines to finalise the necessary agreements and disburse funds as quickly as possible.”