The Treasury Department announced it offered loans to seven major U.S. airlines on Tuesday, including Alaska, American, Frontier, JetBlue, Hawaiian, SkyWest and United.
Each airline could receive a multi-billion dollar loan from the Treasury, which is responsible for doling out $25 billion in funding for airlines that Congress approved in the CARES Act earlier this year.
The CARES Act authorized such loans to provide liquidity to businesses devastated by the coronavirus pandemic.
The Treasury said it expects initial loan amounts per airline to increase due to some of the airlines determining not to move forward with the loans due to the availability of private financing, though under the outlined terms, no airline will receive more than a $7.5 billion loan.
Airlines have until Sept. 30 to accept the CARES Act-sanctioned loan. Delta and Southwest already indicated they will not accept a loan.
“The payroll support and loan programs created by the CARES Act have saved a large number of aviation industry jobs, and kept workers employed and connected to their healthcare, during an unprecedented time,” Treasury Secretary Steven MnuchinSteven Terner MnuchinDemocrats unveil scaled-down .2T coronavirus relief package Households, businesses fall into financial holes as COVID aid dries up Centrist Democrats got their COVID bill, now they want a vote MORE said in a statement. “We are pleased to conclude loans that will support this critical industry while ensuring appropriate taxpayer compensation.”
The CARES Act requires loan borrowers to provide appropriate taxpayer compensation and borrowers must commit to requirements regarding the maintenance of employment levels and limiting employee compensation, dividends and share repurchases.
American Airlines announced last Friday it secured a $5.5 billion loan from the Treasury Department and left the door open for more funds, depending on CARES Act funding allocation.
Mnuchin also endorsed extending the Payroll Support Program (PSP) and called on Congress to do so. PSP, which was a provision of the CARES Act, prohibited airlines from firing or laying off any employees until Oct. 1.
“We call on Congress to extend the Payroll Support Program so we can continue to support aviation industry workers as our economy reopens and we continue on the path to recovery,” Mnuchin said.
The House Democrats’ $2.2 trillion coronavirus relief package, which was unveiled on Monday, includes $25 billion to stave off these layoffs until at least April by extending PSP by six months. Major airlines and the industry group Airlines for America have lobbied for this $25 billion inject ahead of the Oct. 1 layoffs.