US Carriers Set To Receive Up To $25 Billion From Treasury Loans

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Five US Airlines are set to receive combined assistance of up to $25 billion from the United States Treasury. The loans would be provided to American Airlines, Frontier Airlines, Hawaiian Airlines, Sky West Airlines, and Spirit Airlines under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

US Airlines, Treasury Loan, CARES Funding
US Airlines are set to benefit from up to $25 billion in additional CARES funding.

Airlines across the globe are currently dealing with the fallout of the COVID-19 pandemic. Back in early March, the CEOs of Europe’s largest air carriers believed that the epidemic would quickly pass with only a momentary impact on the aviation industry.

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However, this couldn’t be further from reality. Instead, the aviation industry would go on to experience its worst crisis in just over 100 years of history; worse than 9/11, the financial crash, and other similar events combined.

Many airlines across the world have been forced to file for liquidation, bankruptcy, or other similar measures, including significant airlines like Aeromexico, and LATAM. Meanwhile, others have been seeking bailouts, such as the €9 billion ($10.1 billion) recently allocated to Lufthansa.

Spirit airlines A321
Five airlines have so far agreed on loan terms. Photo: Getty

What’s new for the US carriers?

The US Treasury today released that it had reached an agreement with five major airlines on the terms of loans to be provided under the CARES Act. The loans will be made under Title IV of the act. This allows the treasury to “make loans to eligible businesses related to losses incurred as a result of the coronavirus pandemic.”

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However, airlines are required to provide something to compensate taxpayers appropriately. This can include warrants, equity interests, and senior debt instruments. Also, airlines benefiting from the aid have to make some commitments regarding maintaining employment levels.

Commenting on the news, Secretary Steven T. Mnuchin said,

“We are pleased that major air carriers intend to use this important program and for Treasury to use its authority under the CARES Act to provide much-needed financial assistance, while ensuring appropriate taxpayer compensation. Conversations with other airlines continue, and we look forward to finalizing agreements as soon as possible.”

United Airlines Aircraft
Other airlines are still in negotiations with the treasury. Photo: Getty Images

How much will carriers get?

The US Department Of The Treasury didn’t break down how much individual airlines are set to benefit from the loans. However, Reuters did share some details. The publication reported that American Airlines expects to receive $4.75 billion of the funding.

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Meanwhile, Reuters further reports that Hawaiian Airlines has sought $364 million, while Spirit is eligible for up to $741 million. The publication didn’t comment on the loan amounts that the other airlines could receive or are requesting.

These loans will be on top of additional funding that was already paid out to airlines through payroll assistance earlier during the pandemic. In the first wave of funding, American Airlines already received $5.8 billion through the CARES Act.

What do you make of the latest round of funding due to go to the US airline industry? Let us know what you think and why in the comments!

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