Treasury Department May Increase Airlines Coronavirus Loans As Delta, Southwest Withdraw, Freeing Funds

A member of a ground crew walks past American Airlines planes parked at the gate during the coronavirus disease (COVID-19) outbreak at Ronald Reagan Washington National Airport, April 5, 2020.

Joshua Roberts | Reuters

The Treasury Department said on Tuesday that airlines could receive larger than expected federal loans after some carriers pull out, freeing up more funds into the program.

Congress approved $ 25 billion in federal loans for U.S. airlines in March to help them overcome the Coronavirus pandemic, which kept air travel demand at around 30% of last year’s levels.

Despite preliminary agreements, Southwest Airlines and Delta Airlines said they ultimately did not plan to continue with the loans, thanks to other sources of funding. Delta, for example, said earlier this month that it was able to enlarge a debt sale backed by its SkyMiles loyalty program at $ 9 billion compared to the planned $ 6.5 billion.

Airlines have until Wednesday to decide whether or not to accept the federal loans.

Seven airlines – Alaska, American, Border, JetBlue, Hawaiian, SkyWest and United plan to take out loans, the Treasury Department said.

American said last week it got $ 5.5 billion from the program, more than the $ 4.75 billion it expected to receive. The Fort Worth-based carrier said it expects to have up to $ 7.5 billion available, the maximum amount for a single carrier.

US passenger airlines have also received portions of $ 25 billion in wage assistance, mostly subsidies, from the government. The funds ban carriers from cutting jobs until Oct. 1, but in just hours, airlines, mostly US and United, plan to cut more than 30,000 jobs.

Airlines and their unions are urging Congress to pay an additional $ 25 billion that would preserve jobs in the industry until March 31. This proposal won the support of a bipartisan group of lawmakers as well as Trump. administration and was included in a new $ 2.2 trillion national coronavirus relief House Democrats were unveiled on Monday.

“We call on Congress to expand the payroll support program so that we can continue to support workers in the airline industry as our economy reopens and we continue on the road to recovery,” the secretary said. treasure Steven mnuchin said in the statement.

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