US Treasury Secretary Steven Mnuchin and major US airlines on Tuesday reached an agreement on aid amid the coronavirus pandemic, in a bid to pay workers and avoid bankruptcies in an industry that employs 750,000 people.
The Treasury came to terms with 10 airlines, including the four largest -- Delta Air Lines, Americans Airlines, United Airlines and Southwest Airlines.
Some were initially hesitant to accept the money for fear of nationalization despite the damage done by the virus, which has brought air travel to a standstill.
"We look forward to working with the airlines to finalize the necessary agreements and disburse funds as quickly as possible," Mnuchin said in a statement.
Congress last month approved a USD 2.2 trillion stimulus plan to rescue the world's largest economy, which includes USD 25 billion for airlines to continue paying employees' salaries and benefits until September 30.
While details of the agreement were not disclosed, a source close to the negotiations said the US government would become a minority shareholder in the airlines.
In his statement, Mnuchin said the deal "will support American workers and help preserve the strategic importance of the airline industry while allowing for appropriate compensation to the taxpayers."
In talks last Friday, the Treasury informed the airlines that they'd have to pay back 30 percent of the money they received, the source said.
The federal government also wanted warrants -- financial instruments that can be turned into stock shares and whose price is usually fixed in advance -- in exchange for the help.
According to the source, Washington was asking for warrants to compose 10 percent of the aid that each company receives.
Airlines are also eligible for another USD 25 billion in loans to help them resume operations after the pandemic caused air traffic to plunge, meaning carriers to suspended routes, cut back on orders and cancelled hundreds of flights.
Disclaimer: No Business Standard Journalist was involved in creation of this content
