NEW YORK, March 31 (NNN-AGENCIES) — Major US airlines asked the US Treasury to move quickly to release up to $58 billion in government grants and loans and recommended a formula to divide up the money.
In a letter, carriers wrote that “given the urgent and immediate need, it is essential that these funds be disbursed as soon as possible.”
The letter was signed by the chief executives of American Airlines (AAL.O), Delta Air Lines (DAL.N), United Airlines, Alaska Air Group (ALK.N), JetBlue Airways Corp (JBLU.O), Southwest Airlines Co (LUV.N), Hawaiian Airlines (HA.O) and Atlas Air Worldwide (AAWW.O). It was also signed by senior executives at UPS Corp (UPS.N) and FedEx (FDX.N) and the head of an airline trade association.
The $2.2 trillion stimulus and assistance legislation signed into law Friday by President Donald Trump gives passenger airlines $25 billion in cash assistance to cover payroll costs and $25 billion in loans, while cargo carriers are eligible for $4 billion in grants and $4 billion in loans.
Airlines had threatened to quickly start laying off tens of thousands of workers within days if they did not get a bailout. Treasury faces an April 1 deadline to issue procedures to airlines to apply for grants.
The airlines said Treasury should allocate grants in accordance with salaries and benefits paid by carriers from April 1 through Sept 30, 2019 and filed with the U.S. Transportation Department.
The letter suggested the loans be divided by each passenger carrier’s pro rata share of “system available seat miles” for 2019 operations. For cargo carriers it said the loans should be divided by “revenue ton miles” for 2019 operations.
The carriers’ letter said executives looked forward to meeting with Treasury “to discuss the specific terms” but wanted to “make clear that we are speaking with one voice when we propose these formula allocations.”
According to 2019 stock market filings for the top publicly-traded U.S. carriers, American Airlines paid the most in salaries and benefits at about $6.4 billion over a six-month period.
It was followed by United Airlines, Delta, Southwest, Alaska Airlines, JetBlue, Spirit Airlines (SAVE.N) and Hawaiian.
United, which flies long Asia-Pacific routes, recorded the most available seat miles (ASMs) at about 285,000 in 2019, followed by Delta, American, Southwest, Alaska, JetBlue, Spirit and Hawaiian.
American Airlines said last week it believed it was eligible for $12 billion in U.S. loans and grants.
The funds were allocated to the company in the $2.2tn economic stimulus package approved by the US government last week.
American Airlines hopes the financial support means pay cuts and involuntary furloughs can be avoided.
The carrier says there will be reduced flight schedules over the next few months and the company will therefore offer enhanced voluntary leave and early retirement options to its staff.
With airlines around the globe practically grounded, there’s growing concern how those companies can survive the next weeks. — NNN-AGENCIES
