US Airlines rescue package goes ahead

Back in March major US Airlines issued a proposal to the US government. The proposal package from the US Government although smaller is still significant.

The US has agreed a package of around $25Bn for 10 of the country’s largest airlines to help them through this COVID-19 crisis

US rescue package

This rescue package comes with some strings. A key requirement to ensure that the money helps the staff which work for them.

Under terms laid out by the US treasury last week major airlines expect to pay 30% of payroll funds they receive.

What has been confirmed is the restrictions on share repurchases. Share repurchases became a hot issue as airlines have used spare funding earlier this year to buy back stocks. This funding limits US carrriers from share repurchases until the end of September 2021. Executive pay is also in the package. Limiting increased until April 2022.

US Treasury on the US Airlines package

We look forward to working with passenger carriers across the US to finalise the necessary agreements and disburse funds as quickly as possible

Support American workers and help preserve the strategic importance of the airline industry while allowing for appropriate compensation to the tax payer.

Steve Mnuchin : US Treasury Secretary
United Airlines
United Airlines accepts funding with strings

The majority of the cash is grants which will not need to be paid back. Competitively though other global carriers will continue to put pressure on their own governments. Citing the US Treasury as protecting it’s own industry whilst not helping global carriers within the wider industry. Something which the European Union has always struggled with.

Smaller passenger operators in the USA. Those looking to take less than $100 million in state aid are to receive all of their money in grants. Without the need to pay any money back to the treasury jobs will be secured until the end of October.

Industry is hoping that the security of the airlines with this cash boost will see them begin to operate passenger flights before the cash runs out. With passenger flights expected to re-start by the autumn the security should give passengers the confidence to book flights.

US Cargo Industry, Will it benefit

The knock-on effect for the cargo industry across the USA will be immense. American Airlines, United Airlines, Delta, Southwest, Jet Blue and Alaska Airlines have all agreed to the support package. With passenger flights accounting for the majority of cargo moved around and to/from the USA. Seeing passenger flights re-start is key to kick-starting the air cargo economy.

$4 Billion is available to the cargo industry. In order to secure the workforce for the recovery. It is only available for those working at cargo airlines. Not available to handling agents or the wider cargo support businesses. These cargo businesses will fall under the wider reaching broad rescue package. A $2 trillion air package to save jobs and bail out companies.

Other US passenger airlines are likely to commit to this financial package in the coming days.

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