The aviation industry in the U.S. is trying to survive as most of the airports are almost empty. In this situation, it is very tough to stay afloat and to survive airlines decided to accept the financial aid from the government.
Major U.S. airlines accepted the government’s terms to receive billions of dollars in aid. This way they will be able to keep thousands of employees on the payrolls. The Treasury Department announced this decision on Tuesday.
Let’s have a look at the airlines that accepted the bailout offer. American Airlines, as well as Southwest Airlines, United Airlines, and Delta, are among the companies that decided to accept this offer.
Moreover, the Treasury Department is also working with smaller carriers. The department plans to approve their applications as soon as possible. Also, the department is willing to help cargo carriers as well and to accomplish this task, the Treasury Department plans to start discussions with such companies.
Airlines and stimulus package
The number of passengers fell by 96% and carriers canceled 70% of their flights. This data indicates the severity of the ongoing crisis. An International Airline Association expects the industry to lose $314 billion.
The stimulus package includes a combination of grants and low-interest loans. In the case of grants, airlines do not need to pay back. American expects to receive $5.8 billion from the fund. Out of $5.8 billion, the vast majority more precisely $4.1 billion is a grant and $1.7 is a loan. Moreover, American plans to apply for $4.75 billion in additional loans.
Another major company expects to receive $3.2 billion, including nearly $1 billion as a loan. Southwest Airlines plans to repay the loan within a decade and is securing the loan with stock warrants.
Importantly, the $2 trillion coronavirus stimulus bill includes more than $58 billion to support the aviation industry. Companies will spend half of $58 billion to fund employee payroll costs through September.