Airlines leave $29b aid fund untapped in bet on rebound

Bloomberg

US airlines have yet to tap $29 billion in federal pandemic relief loans as they wait to see whether the reopening of the economy revives demand and diminishes the need for money that comes with government strings attached.
Although the four largest US passenger airlines have applied for the Treasury Department program, only American Airlines Group Inc has said it intends to tap the pool of funds.
Southwest Airlines Co, United Airlines Holdings and Delta Air Lines Inc say they plan to wait until fall before deciding whether to take the money — after a summer travel season that could see more people return to the skies.
The wait-and-see approach illustrates how airlines are preparing for an uncertain future amid early signs of a recovery after Americans all but stopped flying in April due to the coronavirus and travel restrictions. A second wave of infections could make the situation worse.
It also highlights how only a small portion of hundreds of billions of dollars available to the Treasury Department has actually been doled out to help companies. “That pool of money is designed as backstop financing and for those who can’t raise money elsewhere,” said Helane Becker, an analyst at Cowen & Co in New York.
US airlines have separately raised billions in capital through methods including secured loans, bond offerings and equity sales, and Becker said that the federal loans are a last resort. The government loans would impose restrictions such as a cap on executive compensation and require carriers to offer equity or other financial stakes to the government in exchange for the aid.
“The hope is that by September, the worst of the pandemic is behind us and people will be booking for travel in the fall and the holidays, and airlines won’t need to take the money,” Becker said.
A Treasury Department spokeswoman declined to comment on the number of loan applications received and when the money would be distributed.