A USD 2 Trillion economic bailout will be voted by the U.S. Senate that will include USD 25 Billion for airlines in cash grants. The airlines are facing the worst travel downturn in history. Republican Senator Pat Toomey announced that passenger airlines are eligible for USD 25 Billion in grants and loans. Cargo lines will be eligible to USD 8 Billion in grants and loans.
These grants will be utilized for payroll costs for contractors and airlines. Toomey declared that the government may receive warrants, equity or other compensation as part of the rescue package. Airports in the U.S. are to receive USD 10 Billion in the drafted agreement. The bill restricts stock buybacks, executive compensation and dividends. Workers cannot be laid off or receive pay cuts if the company receives assistance.
Republicans in the Senate on Sunday had rejected grants for airlines and proposed USD 58 Billion in loans for airlines. Sara Nelson, president of the Association of Flight Attendants said on Twitter it was a “HUGE fight but we WON on this – We got the deal structured around maintaining payroll, no (involuntary) furloughs.” Transportation Secretary Elaine Chao had spoken to lawmakers and others related to the matter in the administration. Chao had drafted a memo that noted that airlines employ 750,000 U.S. workers and the dramatic decline in the aviation sector will reduce competition and constitute a loss of hundreds of thousands of jobs. “Without grant assistance, U.S. airlines have warned that they may be forced to furlough employees or declare bankruptcy,” Chao’s memo warned. “Without grants, airlines may be forced to choose bankruptcy over federal loans, if loan conditions are too inflexible.”
Written by Bryan Shin.
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