|Staff Reporter |||Apr 21, 2020 06:48 PM EDT|
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On Monday, the U.S. Treasury Department said it had allocated $2.9 billion in preliminary compensation aid to 54 minor passenger carriers and two large commercial airlines, while finalizing grant deals with six other major carriers.
The Treasury is initially allotting 50 percent of the funds for major airlines and transfers the remaining amount in a sequence of payments. The Treasury is disbursing to US passenger airlines a total of $25 billion in assistance intended for salary costs.
Airline companies must pay back 30 percent of the aid in low interest loans and Treasury warrants equivalent to 10 percent of the actual amount of loan. The Trump administration sent out the first payments late Monday, which were intended to help rescue airline jobs as the global health crisis ravages the airline sector.
The US Treasury sent the plan's first amount, negotiated last week after hard-fought talks, to the affected airlines. Companies involved in the assistance program accounted for approximately 95 percent of US airline volume, the Treasury department disclosed. Over 750,000 people in the US are directly employed in the industry.
Southwest stated that it would immediately get 50 percent of the $3.2 billion salary assistance, and the remainder in installments from May to July.
Separately, the Treasury announced that Frontier Airlines, Alaska Airlines, JetBlue Airways Corp, Hawaiian Airlines and SkyWest Airlines have all stated they are considering to participate.
Airlines who will receive the financial grants can not terminate workers before September 30 or revise collective bargaining contracts and must consent to limitations on buybacks, executive payments and dividends.
The Treasury also said that it has finalized funding assistance with American Airlines, Allegiant Air, Southwest Airlines, Delta Air Lines, United Airlines and Spirit Air Lines.
The federal government has not released the specific terms of the deal, but US Treasury Secretary Steven Mnuchin has stated the arrangement provides for sufficient taxpayers' compensation.
All funds disbursed under the financial package can only be used to continue paying employee salaries and benefits, the Treasury department disclosed.
The US Treasury is still evaluating how to grant $4 billion in salary aid to cargo companies and $3 billion to airport contractors like aircraft caterers and service units.
The estimated losses that global airline companies have suffered so far from the pandemic have skyrocketed to $314 billion, a quarter more compared to recent projections, the International Air Transport Association divulged last week.
In the U.S. alone, the commercial airline sector is seen to lose around $10 billion to $12 billion every month, trade group Airlines for America reported, and carriers have reduced their overall operational capacity by approximately 80 percent while parking thousands of their once busy fleet of aircraft.
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