The US Treasury Department has released an additional $9.5 billion to help airlines pay their workers amid the ongoing slump in demand caused by the coronavirus pandemic. The released funds were part of the country's Payroll Support Program designed specifically to support the country's airline sector.
The additional funds bring the total amount released through the program to about $12.4 billion. Under the program, 10 major airlines and 83 smaller carriers have so far received the money. The program is aimed at helping airlines save their worker's jobs amid the crisis.
The total amount approved by the US Congress to be released under the program is about $25 billion. Airlines that receive more than $100 million in grants will be required to pay 30 percent of the amount over a 10-year period with very low-interest rates. They will also be required to issue warrants equivalent to about 10 percent of the grants they have received.
Airlines that receive the grants will be required to retain workers at least until September 30 this year. They will be prohibited from cutting pays or furloughing employees as part of the grant. Other conditions that had been outlined by the Treasury Department include restrictions on executive compensations and bonuses as well as a temporary halt in stock buybacks and dividend payments.
Under the program, the country's four largest carriers will receive the bulk of the funds. American Airlines Group, United Airlines Holdings, Delta Air Lines, and Southwest Airlines will cumulatively receive around $19.2 billion under the program. The major airlines will initially receive 50 percent of the funds during the first few phases, with the rest released throughout the remainder of July.
Smaller airlines and contractors will receive funds on a "rolling basis." The compensation requirements for airlines that receive $50 million or less from the program will be much less when compared to those who receive larger amounts. The application forms for smaller airlines and contractors were published by the Treasury Department over the weekend.
According to the Treasury Department, airlines and companies that deem themselves as essential to the industry must submit their application forms before May 1. So far, companies such as Alaska Airlines and Delta have confirmed their applications. Boeing has yet to confirm if it had applied for a grant through the payroll support program.
Despite the already substantial amounts that had been released, industry experts believe that it may not be enough given the current situation. Travel demand in the US has plummeted by more than 95 percent since the start of the pandemic and it is not showing any signs of improvement.
