MIAMI – The US Treasury Department said it has closed loans for seven airlines and joined the industry to ask Congress to further extend its aid to prevent massive job cuts later this week.
Specifically, American Airlines (AA) and United Airlines (UA), the Treasury Department reported late Tuesday, are among the seven carriers taking federal loans that are capped at US$7.5bn each.
US Airlines continue to grapple with a sharp drop-off in travel because of the coronavirus pandemic and accompanying restrictions. The loans were one of two major sources of aid to airlines under the CARES Act passed in March. Airlines also received US$25bn to continue paying workers through the summer.
American carriers are ready to cut more than 30,000 employees starting Thursday when these protections expire. American Airlines and United account for the majority of the cuts.
A Late Tuesday Closing of Loans
Apart from AA and UA, the Treasury Department said late Tuesday it closed loans deals with Alaska Airlines (AS), Frontier Airlines (F9), Jetblue Airways (B6), Hawaiian Airlines (HA), and Skywest Airlines (OO). AA had previously announced it would take a US$5.48bn loan backed by its loyalty program, up from US$4.75bn from an initial plan.
Other airlines have sought support elsewhere. Southwest Airlines (NW), Delta Air Lines (DL), and others forwent their share as they found funding in private markets, leaving a limited number of carriers with more federal bailout funds to tap.
How much each carrier borrows has not been outlined out by the Treasury Department. However, for an individual carrier, the Treasury Department limited the funds to no more than 30% of the overall program.
Unions Running Out of Time to Get More Federal Aid
Treasury Secretary Steven Mnuchin said in a statement, “We call on Congress to extend the Payroll Support Program so we can continue to support aviation industry workers as our economy reopens and we continue on the path to recovery.”
Democrats in the US House of Representatives this week included more than US$25bn for airlines in their latest air proposal which could come up for a vote in the House as soon as Wednesday.
Before October 1, lawmakers and business officials were more skeptical about the chances of a wider agreement, but after a meeting with Mr. Mnuchin on Tuesday, House Speaker Nancy Pelosi (D., Calif.) informed reporters that she was optimistic this week they may achieve a compromise.
American Airlines Airbus A321neo N402AN Photo © Luca Flores