Major US airlines have accepted the government’s terms to receive billions of aid and keep hundreds of thousands of employees on the payrolls, the Treasury Department announced Tuesday.
American Airlines, Southwest Airlines, Delta Airlines and United Airlines are among those who have accepted the bailout offer, Treasury Secretary Steve Mnuchin said in a statement.
Mnuchin said the department is “is also working to review and approve applications for smaller passenger air carriers as quickly as possible,” and would take up discussions with cargo carriers “very soon.”
The package includes a combination of grants, which the airlines do not need to pay back, and low-interest loans, which the airlines and labor unions heavily resisted. Ongoing talks over what the Treasury Department would receive from the airlines delayed the agreement.
American said it expects to receive $5.8 billion from the fund: $4.1 billion as a grant and $1.7 billion as a loan. It will also apply for $4.75 billion in additional loans.
“With this level of assistance, we now believe we have the financial resources necessary to help us withstand this crisis and be in position to serve the traveling public when they are ready to start flying again,” American CEO Doug Parker and President Robert Isom wrote employees in an internal message.
Southwest Airlines said it expects to receive $3.2 billion, including nearly $1 billion as a loan. The airline said it expects to pay back the loan within a decade and is securing the loan with stock warrants.
The $2 trillion coronavirus stimulus bill President Donald Trump signed last month includes more than $58 billion to prop up the aviation industry – half of it to help airlines fund employee payroll costs through September.
While there remains demand for cargo flights, interest in passenger travel has all but ended due to the coronavirus pandemic.
Passenger counts have dropped 96%, and airlines have canceled more than 70% of their flights. Only one in 10 seats are flying with a paying passenger. An international airline association on Tuesday raised its estimates of worldwide industry losses to $314 billion. Tens of thousands of airline employees have taken unpaid furloughs, and others connected to the aviation industry have lost their jobs.
In exchange for accepting the funds, airlines must agree to prohibitions on stock buybacks and layoffs, and limits on executive compensation. Airlines must also provide at least a minimum level of service – as few as one flight weekly – to the destinations currently served.
The payments were due to airlines more than a week ago, but the airlines and government deadlocked over Treasury’s interest recouping some of the amount it pays out. The government demanded airlines repay up to 30% of the sum as a low-interest loan. That provision does not apply to smaller airlines.
Aviation labor unions sided with airlines in urging the government to require as little as possible from the airlines. Asking too much, the unions reasoned, could cause the airlines to not accept the aid, potentially costing hundreds of thousands of jobs.
A major flight attendants union, Association of Flight Attendants, called the final terms an “unprecedented accomplishment” but said Mnuchin “decided to play games with this aid, rather than deliver it in the way Congress intended in the bipartisan deal.”
The Transportation Department on Tuesday separately announced how it would allocate around $10 billion in aid to airports around the nation.
This story has been updated with additional details.
CNN’s Evan Perez contributed to this report.