Fort Worth-based American Airlines will receive up to $5.8 billion as part of the federal government’s rescue package for the airline industry, the company said.
U.S. Treasury earlier this week reached an agreement with ten of the largest airlines in the U.S. for appropriating a total $25 billion bailout. Airlines have specifically been hit hard as a result of travel restrictions and sudden halt of the economy caused by the coronavirus pandemic.
American Airlines will receive $4.1 billion in direct support and $1.7 billion in low-interest loan payment.
The financial assistance stemmed out from the Payroll Support Program created through the roughly $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act, which U.S. Congress had passed in March.
“The Payroll Support Program recognizes the extraordinary dedication of our entire team, and importantly, sustains the critical air service being provided by our frontline team members,” American Airlines Chairman and CEO Doug Parker said in a statement. “Those team members are our heroes, and we are elated that this program will enable us to continue to employ and pay our team while they fly through this period of depressed consumer demand.”
According to American Airlines, the awarded financial aid will now protect its employees from involuntary furloughs or pay rate reductions through Sept. 30, 2020. The airline also agreed to limitations on stock buybacks, dividends and executive compensation.
Southwest Airlines, headquartered in Dallas, is receiving $2.3 billion in direct payroll support and almost $1 billion through unsecured term loan.
“As we are now in the implementation phase of the CARES Act, we applaud the quick action by the U.S. Department of Treasury to infuse liquidity into the economy and try to keep businesses open and people on the job—and that certainly includes the airlines and our Employees,” Southwest Chairman and CEO Gary Kelly said in a statement.
Other airlines in the $25 billion-plan includes Alaska Airlines, Allegiant Air, Delta Air Lines, Frontier Airlines, Hawaiian Airlines, JetBlue Airways, United Airlines and SkyWest Airlines.
The U.S. Treasury is working on a different plan for small passenger air carriers. The Treasury has received more than 230 applications for payroll support from a wide range of passenger air carriers.
“The Payroll Assistance Program is critical to providing much-needed relief to Americans who work in the aviation industry,” Treasury Secretary Steven Mnuchin said in a statement. “Small and medium-sized passenger aviation businesses are particularly vulnerable to the disruption from COVID 19. This determination will provide significant support to workers and businesses across the country, while also appropriately compensating taxpayers.”