- A bipartisan coronavirus aid package in the Senate provides the country's airlines with $ 58 billion spread over loans and pay slips.
- The coronavirus bailout, which meets US airline requirements, would prohibit share buybacks and stock dividends for at least one year after the loan has been repaid. It also limits executive remuneration.
- Airlines will not be allowed to lay off or take leave until September if the crisis continues for airlines to effectively protect "hundreds of thousands of jobs", a union representative said.
- You can find more stories on the Business Insider homepage.
Airlines will receive nearly $ 60 billion in financial support under the Senate bailout package to meet their request as the coronavirus pandemic shakes the industry.
The bill provides for loans and loan guarantees of $ 25 billion for passenger airlines and another $ 4 billion for cargo airlines.
In addition, the bill provides airlines with $ 25 billion in grants to pay workers by September. Freight airlines will receive an additional $ 4 billion.
Separate loans of $ 17 billion have been earmarked for companies "vital to maintaining national security". Boeing is said to be the intended recipient of much of the amount.
The loans depend on job protection. Airlines that accept aid are only allowed to dismiss or leave their workers on September 30th. At this point, the crisis may be over for air carriers, or may be unwinding.
Aid-receiving airlines are also prohibited from repurchasing treasury shares one year after the loan has been fully repaid, and they may not distribute dividends to shareholders while receiving aid. The finance minister can waive this provision if it is deemed "necessary to protect the interests of the federal government", although in such a case the secretary would have to testify in front of the house and the senate.
Compensation for airlines receiving aid is limited to the 2019 level. The CEOs of major U.S. airlines earned total compensation of between $ 10 and $ 15 million in 2018. The 2019 figures are not yet publicly available.
Under the terms of the loan portion of the bill, the government would take a stake in the company until the loan is repaid – something Boeing CEO David Calhoun said earlier that the company does not want to accept.
How aviation industry stakeholders respond
Passenger and cargo airlines in the United States jointly requested $ 58 billion in aid through the Airlines for America lobby organization: $ 29 billion in payslips and $ 29 billion in loans.
Airline workers unions have argued that providing airline aid in the form of payslips is the quickest way to provide help because workers already have a payout mechanism.
The Association of Flight Attendants (AFA), who represents cabin crew at about 20 major and regional airlines, said she was happy with the deal and would help employees worry about layoffs.
"This is an unprecedented win for aviation frontline workers and a template for all workers to build on," said AFA President Sara Nelson in a statement. "The payslips we received on this bill will save hundreds of thousands of jobs and keep working people connected to the health care that many will need during this pandemic."
"This is not a rescue operation for companies, but a rescue package for workers – for flight attendants, gate agents, pilots, mechanics, caterers, airport maintenance and janitorial staff and everyone who keeps our flight system in motion," she added.
The Air Line Pilots Association (ALPA), the largest pilot union, reacted similarly.
"From the outset, ALPA claimed that any economic relief bill must put workers first to keep planes going and move our economy," said Captain Joe DePete, president of ALPA, in a statement.
"ALPA pilots welcome the fact that the economic aid package includes provisions to limit vacation time, protect our contracts, and ensure that federal support is used to pay salaries and benefits for airline employees, not for executive compensation or to buy back company shares, "he added.
Another $ 3 billion in payslips would be given to airline contractors who have come under pressure from the slump in travel. However, it was not immediately clear whether airlines released last week would be included in the new protection.
"Once approved, layoff protection for contracted airport employees could make the difference between families who are starving, homeless, or clinging to survive with the industry in which they operate," said Kyle Bragg, President of 32BJ SEIU, the airline contract worker, represents the New York area, said in a statement. "We ask Congress to pass the law protecting 125,000 contracted airport workers and to ensure that our airports can continue to operate after the crisis has ended."
Airline revenue has declined since the pandemic began as travel demand has dropped to almost zero. Travel bans and border closures, as well as instructions for self-isolation or quarantine, have forced airlines to suspend routes and ground planes and to cut costs where possible.
So far, US airlines have avoided layoffs and vacations and offered unpaid vacation options to employees. In a letter from Airlines for America, the airline's CEOs warned on Saturday that staff cuts would be inevitable without pay slips.
In the letter, the airlines said that if the crisis lasted until summer, they could avoid payroll grants until at least August 31, 2020. The Senate bill provides for an additional month before job cuts.
United Airlines individually warned staff on Friday not to start downsizing if an aid package was not settled by the end of March.