The announcement comes as tens of thousands of airline employees face the possibility of furloughs if Congress is unable to reach a deal to extend a separate grant program that gave airlines billions of dollars if they agreed to keep workers on the job through the end of September. While negotiations continue, a deal must be reached before midnight Wednesday.
“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 health care, during an unprecedented time,” Treasury Secretary Steven Mnuchin said in a statement. “We are pleased to conclude loans that will support this critical industry while ensuring appropriate taxpayer compensation.”
Mnuchin also said Congress must 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.”
At least three other carriers, Delta Air Lines, Southwest Airlines and Spirit Airlines, which signed letters of intent to accept the loans in July, said they will no longer participate in the loan program. Their decision frees additional money for other carriers. Treasury officials said airlines would be eligible for up to $7.5 billion, or 30 percent of the $25 billion available under the program.
“Our national leaders did a tremendous job developing innovative and effective programs to support the aviation industry, which is critical to the U.S. economy,” Spirit Airlines chief executive Ted Christie said in a statement announcing the decision earlier this month. “Ultimately, as a responsible company, we’re all about self-help and we decided it was our duty to avoid burdening the U.S. taxpayer if we had access to viable alternatives in the private market.”
Not all the loan amounts were made public. Treasury officials said that information will be made available 72 hours are the transactions are completed. According to available data, American Airlines received $5.2 billion, while Hawaiian Airlines received $420 million.
Companies that receive loans must follow conditions similar to those required under the grant program, including keeping employees on the payroll through the end of September, maintaining certain levels of service as far out as 2022, and limiting stock buybacks and executive compensation.
Under the Cares Act, airlines were eligible to receive more than $50 billion in grants and loans. Congress is negotiating on whether to extend the $25 billion grant program that focused on keeping pilots, flight attendants, mechanics and other front-line workers on the job. The separate loan program made $25 billion available to airlines, certified repair stations and ticket agents.
The seven carriers expected to obtain loans received more than $12 billion through the grant program. Of that amount, American and United got the most, with American receiving about $5.8 billion and United just under $5 billion. Alaska received about $992 million; JetBlue Airways, roughly $936 million; Frontier Airlines, $205 million; Hawaiian Airlines, about $292 million; and SkyWest approximately $438 million.