THE NEUTRAL ZONE
The nation’s largest airlines on Tuesday accepted $25 billion from the federal government as a part of the CARES Act, a $2 trillion federal stimulus to counteract the economic impact of the coronavirus. Ten airlines agreed to the terms of the bailout following initial objections over the Treasury Department’s requirement that the airlines pay off a portion of the government’s low-cost loans. Those airlines will receive cash assistance to continue paying their employees, in addition to grants that must be paid back to the Treasury Department over the course of 10 years.
Among the airlines that accepted the bailout are American, United, Delta, Southwest, JetBlue, and Alaska. Under the bailout conditions, those airlines will keep at least 90% of their workers on payroll through September, in addition to repaying one-third of the funds they received from the government and suspending stock buybacks and dividends. The airlines must also limit executive pay.
Air travel came to a screeching halt with stay-at-home orders and the worsening of the coronavirus outbreak. The majority of scheduled flights have since been cancelled, with airlines warning they would have to cut their workforces immediately without government aid.
U.S. Airlines’ Lifeline Is Enough to Limp Along, But Little More – Bloomberg – April 15, 2020
“Unfortunately, Treasury is undermining the intent of the CARES Act by treating a portion of the grants designed to protect jobs not as grants, but as loans, which will make it harder to stop layoffs and slow the recovery,” said Joe DePete, president of the Air Line Pilots Association, a labor union. But Representative Peter DeFazio, an Oregon Democrat who has criticized previous bailout programs, said the aid to cover airline payrolls should be the model for all future assistance programs.
Airlines Are Being Bailed Out Again, Here’s What Economists Think Will Happen Next – Forbes – April 17, 2020
On Tuesday, ten airlines told the Treasury Department they would take funds from a $25 billion bailout as the industry faces the looming threat of bankruptcy amid global travel limitations due to the coronavirus pandemic. That bailout is sparking an inevitable debate about moral hazard—when a business engages in riskier behavior because it’s protected from the consequences—and the future of the airline industry.
American Airlines CEO strikes optimistic tone, contrasting with peers at Delta and United – The Points Guy – April 16, 2020
American Airlines CEO Doug Parker is optimistic that the country may be “ready to get moving again,” even as his counterparts at other major carriers repeatedly warn of tough times ahead for the industry. […] The airline was the first to publish drastically reduced May and summer schedules of the major U.S. carriers, and could cut flights further if people do not start traveling again.cIn addition, the airline has indicated that it will seek a $4.75 billion loan from the government’s $2 trillion coronavirus bailout package.
Rep Garry Connolly on Twitter, 4/12/2020 – The #USPostalService needs $25 billion to stay afloat. That’s less than the airlines are getting, and they’ve turned record profits in the last few years. That is unconscionable. We have to #SaveTheUSPS.
Sean Spicer on Twitter, 4/16/20 – The Airlines industry just received a $50 billion bailout from the govt & cannot layoff anyone until Oct 1 – will we see those layoffs then?
Charlotte Clymer on Twitter, 4/14/20 – $25 billion in “assistance” for the airlines after all those stock buybacks. Criminal.