Major U.S. airlines have agreed in principle to a $25 billion rescue package that will ensure airline workers keep their jobs until October
Airlines are hopeful that U.S. passenger traffic, which has dropped by 95% due to the coronavirus pandemic, will begin to recover by October but have warned that the slowdown in air travel could extend into next year and even longer. It’s possible they will need another round of government bailouts to survive.
Under the terms laid out by Treasury officials last week, the government would receive repayment on 30% of the funds awarded to large carriers and warrants equal to 10% of the loan amount that were priced at last week’s close. Southwest said it had agreed in principle and expects to receive $3.2 billion in grants and will have to repay nearly $1 billion over 10 years. Southwest will issue 2.6 million warrants to the Treasury.
Alaska said the Treasury will receive the right to buy 847,000 non-voting shares of parent Alaska Air Group at a price of $31.61 per share.Spirit Airlines Inc, a low-cost carrier which was not listed by the Treasury as reaching agreement, said it expects “to agree on terms soon” for payroll grants.
The statute gave the Treasury the authority to demand compensation for the grants, but did not require it.
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