Delta, United join US carriers in receiving Treasury loans
July 7, 2020 08:22 PM
Five more US air carriers including Delta Air Lines and United Airlines will take out loans under the CARES Act stimulus package, Treasury Secretary Steven Mnuchin said on Tuesday.
The decision means most major US air carriers have agreed to accept financing from the $2.2 trillion measure passed in late March to blunt the impact of the coronavirus pandemic.
"We welcome the news that Alaska Airlines, Delta Air Lines, JetBlue Airways, United Airlines, and Southwest Airlines have now also signed letters of intent," Mnuchin said in a statement.
The CARES Act provided for $25 billion to be lent to airlines.
While carriers were initially hesitant to take the money for fear of draconian conditions, Treasury announced last week that American Airlines, Frontier Airlines, Hawaiian Airlines, Sky West Airlines and Spirit Airlines agreed to the government's terms.
Treasury did not specify the amount each airline was receiving, saying only that it required borrowers to provide warrants, which are financial instruments that can be converted into shares, or other forms of debt or equity.
Borrowers must also comply with conditions like maintaining employment and not paying employees above set levels, along with temporarily suspending the payment of dividends and share buybacks.
The loans are on top of another $25 billion package paid out by the government in exchange for a commitment by the airlines not to cut jobs until after September 30.
American Airlines said last week it had signed a letter of intent with the Treasury for a $4.75 billion loan, but company executives warned in a letter that they expected to have 20,000 more employees than necessary by the fall.