Loading...

Lawmakers closing in on deal for $25 billion in cash coronavirus aid for airlines

People walk through a sparse international departure terminal at John F. Kennedy Airport (JFK) as concern over the coronavirus grows on March 7, 2020 in New York City.

Spencer Platt | Getty Images

Lawmakers on Capitol Hill were close to a deal on a massive aid package for airlines that would include $25 billion in cash grants so carriers maintain payroll as they struggle from the impact of the coronavirus, people briefed on the discussions said Tuesday.

The aid, part of a broader stimulus package aimed at blunting the economic damage from the spreading coronavirus, would be a resounding victory for airlines, their lobbyists and the labor unions that contended loans alone would not be enough to preserve jobs. The package also includes $4 billion in cash grants to keep paying workers at cargo carriers and $3 billion for airline contractors, such as caterers, one of the people said.

The aid would also include a similar amount in loans, the person said. Lawmakers are also considering government-owned stock warrants as a condition of the aid, but that point has not been finalized. President Donald Trump last week said he would consider government equity stakes in companies that receive bailouts.

Lawmakers said earlier Tuesday that they were close to a deal on the overall legislation. 

U.S. passenger and cargo airlines have sought a total of $58 billion in government aid, half of it in loans and the other half in cash grants. Republican senators had proposed that sum but all in loans, which airlines and labor unions said would saddle carriers with debt and make a recovery more difficult.

Airline shares surged on news that lawmakers were nearing a deal. In afternoon trading, American closed nearly 36% higher, Delta gained 21% and United rose close to 26%. 

The coronavirus and draconian measures to stop its spread have decimated travel demand.

While a final deal is not done, the $25 billion in grants for passenger airlines would go toward paying U.S. airline employees, who number 750,000, through the end of the September, according to a person briefed on the negotiations.

Thousands of others work as airline contractors, in airports and elsewhere in aviation. U.S. airline executives pledged over the weekend that they would not furlough workers through Aug. 31 if they received half of their request in grants. They also said they would cap executive pay and pause buybacks for the life of government loans.

Reuters earlier reported the near deal on grants, saying the total sum of these grants would be $32 billion, including payouts to airline contractors and cargo carriers.

Leave a Reply