Airlines and Trump administration haggle over payroll grants

Trump ministration is proposing that a significant amount of $25 billion in cash that airlines expected to keep workers on job will inste be low-interest loans that big airlines will have to repay, according to two people familiar with matter.

Treasury Department began sending proposals for aid to airlines on Friday. American Airlines and United Airlines confirmed receiving responses to ir applications for grants. y said y were reviewing Treasury proposals, and y did t provide details.

Or major airlines eir said y h t received proposals yet or did t respond for comment. Negotiations between Treasury and airlines were expected to intensify over weekend.

As part of a $2.2 trillion ecomic-relief bill approved two weeks ago, Congress set aside $25 billion in grants and ar $25 billion in loans for passenger airlines. industry has been devastated by a plunge in travel caused by coronavirus outbreak that has killed more than 100,000 people worldwide, including more than 18,000 in United States.

CEO Ed Bastian said Delta Air Lines is carrying only 5% of people it carried a year ago.

Treasury Department said Friday that it received applications for relief from more than 230 airline companies, mostly small ones that want less than $10 million. Treasury said 12 airlines are expected to get payments of at least $100 million.

department said that for small companies, it dropped a demand for financial considerations such as warrants or preferred stock to compensate taxpayers. But bigger airlines — names that travelers are familiar with —would have to compensate taxpayers for grants, which could be several billion dollars each for four largest, Delta, American, United and Southwest.

One industry official briefed on discussions said Treasury Secretary Steven Mnuchin talked to CEOs of six largest airlines on Friday and indicated that airlines will get 70% of ir grant allotment in cash, but or 30% will be loans at 1% interest. A second official said loan portion would be “significant” but less than half of grant allotment.

Treasury wants airlines to offer warrants, which are securities that can be converted to stock, in exchange for loans, said people, who spoke on condition of anymity to discuss private negotiations.

Airlines and ir labor unions object to government demanding warrants in exchange for grants because Congress directed that money only be used to pay workers’ ws and benefits — to qualify, airlines must avoid layoffs or pay cuts for employees until October.

President Donald Trump said Friday that his ministration would help airlines, which collectively h been making billions in profits until virus hit.

“We have a great plan for airlines,” Trump said at a White House briefing. “We’ve got to keep airlines going. It’s never been a great business, but it’s a very vital business for ecomy.”

Trump was once in business himself, acquiring a fleet of planes in 1989 from defunct Eastern Air Lines shuttle business and rebranding it Trump Shuttle. venture never turned a profit, eventually defaulted and was later sold to USAir.

(Im Credit: AP)