US: Treasury reaches loan agreements with five major airlines
The US Treasury Department has agreed to terms for loans to American Airlines Group Inc. and four smaller airlines as part of an aid program to help the industry weather the coronavirus pandemic. The Treasury said that in addition to American, Frontier, Hawaiian, SkyWest and Spirit had agreed to loan terms and signed letters of intent. These are the first airlines to accept government loans from a $25b pool Congress earmarked under the Cares Act, the $2.2t economic stimulus package passed in March. Major carriers have also received another $25b in federal aid to pay workers through the end of September to avoid mass layoffs they said would have been inevitable otherwise. The payroll funds are largely made up of grants that don’t need to be paid back. American expects to complete the $4.75b loan in Q3, CE Doug Parker and President Robert Isom wrote in a letter to employees Thursday. The airline has previously said it was seeking to pledge its frequent-flier program as collateral. Even with the infusion of government funds, airlines face a dire outlook. American is burning through $35m in cash per day, Parker andIsom wrote, and likely has more than 20,000 more employees than it needs to operate the shrunken schedule it anticipates this fall. “To be clear, this doesn’t mean 20,000 of our team members will be furloughed in October, it simply means we still have work to do to right-size our team for the airline we will operate,” the executives wrote.<br/>
https://portal.staralliance.com/cms/news/hot-topics/2020-07-03/general/us-treasury-reaches-loan-agreements-with-five-major-airlines
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US: Treasury reaches loan agreements with five major airlines
The US Treasury Department has agreed to terms for loans to American Airlines Group Inc. and four smaller airlines as part of an aid program to help the industry weather the coronavirus pandemic. The Treasury said that in addition to American, Frontier, Hawaiian, SkyWest and Spirit had agreed to loan terms and signed letters of intent. These are the first airlines to accept government loans from a $25b pool Congress earmarked under the Cares Act, the $2.2t economic stimulus package passed in March. Major carriers have also received another $25b in federal aid to pay workers through the end of September to avoid mass layoffs they said would have been inevitable otherwise. The payroll funds are largely made up of grants that don’t need to be paid back. American expects to complete the $4.75b loan in Q3, CE Doug Parker and President Robert Isom wrote in a letter to employees Thursday. The airline has previously said it was seeking to pledge its frequent-flier program as collateral. Even with the infusion of government funds, airlines face a dire outlook. American is burning through $35m in cash per day, Parker andIsom wrote, and likely has more than 20,000 more employees than it needs to operate the shrunken schedule it anticipates this fall. “To be clear, this doesn’t mean 20,000 of our team members will be furloughed in October, it simply means we still have work to do to right-size our team for the airline we will operate,” the executives wrote.<br/>
