Delta, United and other airlines strike deal for federal coronavirus loans

An Airbus SE A310-114 aircraft, operated by Delta Air Lines Inc., flies into San Diego International Airport (SAN) in San Diego, California, U.S., on Monday, April 27, 2020.

Bing Guan | Bloomberg | Getty Images

Five more airlines have reached agreements with the Treasury Department for billions in federal loans to help weather the coronavirus pandemic.

Covid-19 has devastated demand for air travel and sent U.S. carriers to their first losses in years.

Delta, United, JetBlue, Southwest and Alaska have signed letters of intent for the loans, the Treasury Department said Tuesday. Last week, it announced that American, Frontier, Hawaiian, SkyWest and Spirit had also struck agreements for the aid. The CARES Act, a $2.2 trillion coronavirus relief package passed in March, set aside $25 billion in loans for U.S. passenger airlines.

Airlines are grappling with spikes in coronavirus cases around the country as well as continued travel restrictions that will limit demand for flights to Europe and other destinations.

United told reporters last week that demand had started to “flatten out” recently after a resurgence in the early spring and summer.

“The major U.S. airlines play a vital role in our economy and are critical to domestic and international travel and commerce,” the Treasury Department said. “These airlines are among the companies most heavily affected by the disruptions to social and economic activity caused by the pandemic.” 

The Treasury Department didn’t disclose the terms or the amounts of the loans. Delta in April said it is eligible for a $4.6 billion loan while United in May said it could receive $4.5 billion. 

Airlines have also started receiving $25 billion in federal payroll grants that prohibit carriers from laying off or cutting the pay rates of their employees through Sept. 30. Airlines have warned that employees may start receiving as early as this month government-mandated notices about potential furloughs.

Source Article