U.S. Treasury Secretary Steven Mnuchin told major airlines on Friday he wants them to repay some of the $25 billion in cash grants the U.S. Congress approved last month to cover payroll costs as airlines weather an unprecedented crisis due to the coronavirus, three industry officials briefed on the matter told Reuters.
FILE PHOTO: A flight attendant waits for the departure of a one-passenger flight between Washington and New Orleans as the spread of coronavirus disease continues, in Washington, U.S., April 3, 2020. Picture taken April 3, 2020. REUTERS/Carlos Barria/File Photo
Mnuchin spoke with the chief executives of major airlines in separate calls on Friday and told them the department was offering 70% of the aid in grants that would not need to be repaid, and 30% in low-interest loans for which the airlines would be required to offer warrants, the sources said. The interest rates would rise over time if airlines had not repaid them, the sources said.
Treasury said it is working with 12 passenger air carriers expected to get more than $100 million “to secure appropriate financial instruments to compensate taxpayers.” A United Airlines Holdings Inc spokesman said the company was reviewing the details of Treasury’s proposal. American Airlines also confirmed it was reviewing the proposal.
The bill bars entities from receiving grants from stock buybacks, or paying dividends before September 2021 and sets limits on executive compensation. Under the $2.3 trillion CARES Act, passenger airlines are eligible for $25 billion in cash grants for payroll while cargo carriers can get $4 billion and airport contractors like caterers and airplane cleaners $3 billion, in addition to a separate loan package for which they can apply in the months ahead.
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