Trump plan seeks top airlines repaying Covid-19 aid grants

Bloomberg

The Trump administration wants the 12 largest US airlines to repay a portion of the federal grants they receive to cover their payrolls during the coronavirus crisis.
The large carriers, which are set to receive more than $100 million in payroll assistance, are being offered aid packages that would require them to repay 30% of the grants through low-interest loans due within five years, two people familiar with the offers said.
Treasury Secretary Steven Mnuchin began making calls to airlines with the terms after a flurry of lobbying to speed the process of disbursing money from the $2 trillion virus aid legislation finalised on March 27. The people asked not to be named to discuss the offers that haven’t been made public.
Airlines receiving $100 million or less in payroll assistance from the government won’t need to provide a financial stake or pay compensation, the Treasury Department said as it began sending offers to the beleaguered carriers.
“This determination will provide significant support to workers and businesses across the country, while also appropriately compensating taxpayers,” Mnuchin said.
The agency said it had received 230 applications for aid from passenger carriers.
It is working with 12 that would get more than $100 million and is discussing what sort of financial instruments it will require in return.
Katherine Estep, a spokeswoman for Airlines for America, a trade group representing most of the large airlines, said that “We believe the law indicated that the Direct Payroll Assistance funding was to be only in grants — which is considerably more effective for our employees — and not a combination of grants and loans.”
Democrats in Congress have complained about a requirement for a financial stake or a reimbursement, saying the payroll grants were intended to keep workers employed.
A separate pool of $25 billion in loans was also included in the legislation.
The decision by the Treasury to exempt smaller carriers marks a victory for the littlest ones, but the head of the Regional Airline Association, Faye Malarkey Black, urged the department to be flexible with some of the struggling regional carriers as well.
The decision was praised by the National Air Transportation Association, which represents some of the smaller carriers.
“The staff at Treasury has been truly exceptional in terms of their accessibility and receptiveness to our questions and concerns,” said Jonathon Freye, the group’s spokesman.
The Trump administration has quickened the pace of distributing the aid amid complaints that the process was moving too slowly as airlines — which are flying only 5% of their usual load — bled cash.
Representatives of United Airlines Holdings Inc and American Airlines Group Inc said they had received proposed grant packages from the Treasury Department, without providing specifics.
“We can confirm we heard back from the Treasury Department regarding the application we submitted for government support, and we are currently reviewing the details of their proposal,” said Frank Benenati, a spokesman for United.
President Donald Trump said he’ll meet this weekend with airline executives as offers of aid started going out to carriers.