Former American Airlines CEO on $50 billion bailout for airline industry

The US Treasury Department and the country’s largest airlines have tentatively agreed on the terms of $ 25 billion in federal assistance to pay workers and keep their jobs until September. This assistance will include a combination of grants and loans. At the same time, the government will receive orders that can be converted into small shares of shares in airlines..

Market participants did not want to give up their own capital, but the Ministry of Finance demanded compensation for taxpayers. Airlines have little leverage — their business collapsed as the pandemic COVID-19 cuts air travel to near zero, and mass layoffs shake the industry without federal aid.

The six largest US airlines – Delta, American, United, Southwest, Alaska and JetBlue, along with four smaller carriers have reached agreements in principle. The Ministry of Finance noted that negotiations are continuing with other representatives of the market.. Minister of Finance Stephen Mnuchin said the department intends to distribute funds as quickly as possible.

Donald Trump noted that the package of measures will be aimed at supporting aviation employees and protecting taxpayers.

It is known that the payroll is based on the costs of each airline for wages and benefits from April to September 2019..

American Airlines said the Treasury will give them $ 5.8 billion. 4.1 billion will be counted as a grant, and the remaining 1.7 is a low-interest loan. CEO of the company Doug Parker called it «fantastic news», adding that they now have the financial resources they need to survive the current situation.

Delta Airlines Reaches 5.4 Billion Deal with Treasury.

American airlines will receive 25 billion dollars from the state

Analysts expect United Airlines will also be eligible for more than $ 5 billion, but there is no official data yet.

The airlines hoped to start receiving assistance exclusively from budget funds that did not need to be returned. Instead, they found themselves embroiled in tense negotiations with the Treasury Department, which insisted that only 70% of the aid should be donated, and the rest – this is a loan that the airline needs to repay.

National airlines have entered 2020 after a decade of steady growth in the industry. During this period, market participants managed to earn tens of billions of dollars.. However, all this came to an end in just a few weeks, as world governments have restricted flights to slow the spread of the new coronavirus..

Within the framework of a package of measures to provide economic assistance in the amount of 2.2 trillion Congress also approved a separate $ 25 billion program to provide loans to airlines.

American airlines will receive 25 billion dollars from the state

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