A bipartisan coronavirus aid package in the Senate offers $58 billion to the nation’s airlines, split evenly between loans and payroll grants.
The coronavirus bailout package, which aligns with requests made by US airlines, would prohibit stock buybacks and share dividends for at least a year after the loans have been repaid. It also restricts executive compensation.
Airlines would be prohibited from laying off or furloughing employees through September, should the crisis for air carriers continue past then, effectively protecting “hundreds of thousands of jobs,” one union official said.
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Airlines will receive nearly $60 billion in financial assistance as part of the Senate’s rescue package, meeting their request as the industry falls into a tailspin due to the coronavirus pandemic.
The bill grants $25 billion in loans and loan guarantees for passenger airlines, and an additional $4 billion for cargo air carriers.
Additionally, the bill gives airlines $25 billion in grants to pay workers through September. Cargo air carriers get an additional $4 billion.
A separate $17 billion in loans is specified for companies “critical to maintaining national security.” Boeing is reported to be the intended recipient for a large portion of the amount.
The loans are conditional on job protection — airlines accepting aid will not be allowed to lay off or furlough workers until September 30, at which point the crisis could be over or winding down for air carriers.
Airlines receiving aid will also be prohibited from buying back shares of their own stock for a year after the loan is fully paid off and bars them from issuing dividends to shareholders while receiving aid. This provision can be waived by the Treasury Secretary if deemed “necessary to protect the interests of the Federal Government,” though the secretary would be required to testify before the House and Senate in such a case.
Executive compensation for any airline receiving aid is capped at 2019 levels. CEOs of the major US airlines earned between $10 million and $15 million in total compensation in 2018. Figures for 2019 are not yet publicly available.
Under the terms of the loan portion of the bill, the government would take an equity interest in the companies until the loan is paid back — something that Boeing CEO David Calhoun has previously said the company would not want to accept.
How airline industry stakeholders are responding
US passenger and cargo airlines, through the lobbying organization Airlines for America, had jointly asked for $58 billion in aid: $29 billion in payroll grants, and $29 billion in loans.
Airline employee unions have argued that providing aid to the airlines in the form of payroll grants is the fastest way to provide assistance to workers, since there is already a disbursement mechanism in place.
The Association of Flight Attendants (AFA), which represents cabin crew at about 20 mainline and regional airlines, said it was pleased with the deal, and that it would help employees worried about layoffs.
“This is an unprecedented win for frontline aviation workers and a template all …read more
Source:: Business Insider