US Treasury Approves Loan Agreement With 7 Airlines

WASHINGTON (AFP) – The U.S. Treasury announced Tuesday that it had struck a deal with seven major U.S. airlines, including American and United, to offer them loans in a bid to avoid job cuts amid the coronavirus crisis.

But the Treasury statement does not say whether these deals will be enough to allow those two airlines to cancel recently announced plans to proceed with job cuts.

Since March, airlines have been paralyzing planes and delaying aircraft deliveries to try to limit the burning of cash, as the global coronavirus pandemic effectively paralyzed travel for months.

As the US economy gradually reopens, airlines have struggled to convince wary passengers to get back in the skies and international routes have been slashed due to various travel restrictions in place.

Beyond American and United, the other airlines that signed loan agreements with President Donald Trump’s administration are Alaska Airlines, Frontier Airlines, JetBlue, Hawaiian Airlines, and SkyWest Airlines.

Delta and Southwest, unsurprisingly, were not part of the deals, having already said they would not participate.

“We are pleased to conclude loans that will support this critical industry while ensuring adequate compensation to taxpayers,” Treasury Secretary Steven Mnuchin said in the statement.

Mnuchin called on Congress to expand its aid programs to support jobs in the air travel industry.

The $ 25 billion in loans has been made under the federal Coronavirus Relief, Relief and Security Act (CARES), the $ 2.2 trillion coronavirus stimulus package approved by Congress in March.

The airlines had been in talks with the Treasury since July. Certain conditions will apply, such as maintaining a certain number of jobs and salary caps.

The Treasury said the amount of the initial loans could increase “as a result of the determination of some major airlines not to go ahead” with the process.

“The reallocation of funds will be subject to a loan concentration limit of $ 7.5 billion per passenger carrier, or 30% of the $ 25 billion available to passenger carriers,” he said.

The airlines have reached agreements with unions to divide the work among employees. Tens of thousands of employees have also accepted unpaid leave or early retirement packages to avoid the need for involuntary layoffs.

Before Tuesday’s announcement, American Airlines had said it expected to cut up to 19,000 jobs.

United Airlines struck a deal with its pilots union on Monday to avoid licenses for 2,850 pilots, but was still on track to lay off another 13,000 workers as early as October 1, including flight attendants and operations personnel. From the airport.