WASHINGTON—Five U.S. airlines have agreed to tentative terms that will net them access to a U.S. Treasury loan program set up to support business during the COVID-19 pandemic.
American Airlines, Frontier Airlines, Hawaiian Airlines, Sky West Airlines, and Spirit Airlines have signed letters of intent (LOIs) that set out collateral and loan amounts, the U.S. Treasury Department said July 2.
The funds are part of a $25 billion Payroll Support Program (PSP) grant and loan pot established for passenger airlines via the $2.2 billion Coronavirus Aid, Relief, and Economic Security (CARES) Act.
“We are pleased that major air carriers intend to use this important program and for Treasury to use its authority under the CARES Act to provide much-needed financial assistance, while ensuring appropriate taxpayer compensation,” Treasury Secretary Steven Mnuchin said. “Conversations with other airlines continue, and we look forward to finalizing agreements as soon as possible.”
Neither loan amounts nor collateral were detailed.
American said in June that it was eyeing $11 billion in total liquidity in the near future, including a $4.75 billion CARES loan. American said it would propose its domestic AAdvantage Program assets as collateral.
While loans continue to be approved, labor groups are calling on Congress to extend provisions that prevent CARES Act funding recipients from involuntary staff cuts through Sept. 30 in exchange for PSP grant funding through the same time period.
The unions have asked Congress for six more months of PSP grants, enabling recipients to carry current payrolls through March 2021. This, they argue, will provide more time for demand to rebound as the COVID-19 pandemic slows and prevent what many anticipate will be a wave of layoffs anticipated once the CARES Act provisions expire in October.
“Only through an extension of PSP grants can Congress ensure that airline workers will continue to stay on payroll and be ready to turn the industry around; prevent mass unemployment in October; and keep aviation workers ready to lift off as travel picks back up,” the unions said.
The letter, sent to Congressional leadership June 25, was signed by the Air Line Pilots Association; Association of Flight Attendants; International Association of Machinists and Aerospace Workers; Transport Workers Union; Communications Workers of America; and the Transportation Trades Department of the AFL-CIO.
Separately, Alaska Air Group said July 2 it secured nearly $1.2 billion in private loans, putting up 61 of its aircraft as collateral.
The carrier also said it received $30 million in PSP funding for ground services subsidiary McGee Air Services. That money is in addition to $992 million in PSP grant and loan funding already announced as coming to the group.
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