Most Airlines Agree to Emergency Aid Terms

The federal government has reached an agreement in principle with 10 airlines over terms of the federal emergency aid that they will receive.

A report by Aviation Daily said he carriers will receive a combination of grants and loans as part of the $25 billion allocated to them by the Coronavirus Aid, Recovery, and Economic Security Act.

The airlines had wanted all of the funding to come in the form of grants that they would use to pay employees through spring and summer.

However, 30 percent of the aid will be low-interest loans with 70 percent of the funds being grants.

The agreement also said the U.S. Department of Treasury will receive warrants equal to 10 percent of the amount of the loan, which the agency can later convert into shares at a pre-determined price should it desires.

Airlines agreeing to participate in the program include Alaska Airlines, Allegiant Air, American Airlines, Delta Air Lines, Frontier Airlines, Hawaiian Airlines, JetBlue Airways, SkyWest Airlines, Southwest Airlines and United Airlines.

Spirit Airlines said it continues to negotiate with the government over terms of its application for emergency aid but expects to reach an agreement soon.

Treasury Secretary Steven Mnuchin said talks with other airlines are still ongoing, particularly smaller carriers.

The CARES Act requires that airlines accepting financial assistance cannot cut positions through layoffs or furloughs, but can reduce staff through voluntary incentives such as early-retirement or paid leave packages.

Airlines also are prohibited from repurchasing stock or issuing dividends through September 30. They must agree to certain limits on executive pay until March 24, 2022.

The carriers are required to provide minimum levels of service to all points in their pre-pandemic networks to the extent “reasonable or practicable.”

However, some airlines, including Alaska, Allegiant and United have sought waiver requests for exemptions to cease flying to certain points, citing weak demand due to the COVID-19 pandemic.

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