The Treasury Department said Tuesday that the nation's major airlines have tentatively agreed to terms for $25 billion in federal aid to pay workers and keep them employed through September.
The assistance will include a mix of cash and loans, with the government getting warrants that can be converted into small ownership stakes in the leading airlines.
The airlines did not want to give up equity, but the Treasury Department demanded compensation for taxpayers. The airlines have little leverage -- their business has collapsed as the covid-19 pandemic reduces air travel to a trickle and they face mass layoffs without the federal aid.
The nation's six biggest airlines -- Delta, American, United, Southwest, Alaska and JetBlue -- along with four smaller carriers have reached agreements in principle, and the Treasury Department said talks were continuing with others. Treasury Secretary Steven Mnuchin said the department would work with the airlines to finalize deals "and disburse funds as quickly as possible."
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President Donald Trump -- perhaps mindful of criticism that the government was bailing out a previously profitable industry -- said the deals will support airline workers and protect taxpayers.
"Our airlines are now in good shape, and they will get over a very tough period of time that was not caused by them," Trump said.
The payroll aid is roughly based on each airline's spending on wages and benefits from April through September 2019.
Meanwhile, a lawsuit filed against Southwest Airlines alleges the carrier violated its contract with customers by failing to provide refunds for flights canceled amid the coronavirus pandemic.
In the suit, traveler Adrian Bombin says that when Southwest canceled his trip last month from Baltimore-Washington International Marshall Airport, by way of Florida, to Havana, he asked for a refund.
The airline would offer him only a voucher, Bombin said in the federal lawsuit filed Monday in Pennsylvania.
The suit pointed to language in Southwest's contract with customers, which says the airline in such situations would put a customer on the next available flight or refund the fare "in accordance with the form of payment utilized for the Ticket." It alleges Southwest violated that contract for Bombin, and seeks class-action status to represent everyone Southwest failed to refund since March 1.
Other airlines, including United and Spirit have also recently been sued under similar circumstances.
Information for this article was contributed by David Koenig of The Associated Press and by Michael Laris of The Washington Post.
Business on 04/16/2020