WASHINGTON/CHICAGO (Reuters) – A Senate Republican coronavirus stimulus package would provide financial aid to U.S. airports, transit systems and passenger railroad Amtrak, but $50 billion for struggling U.S. airlines would be a loan not a cash payout, according to a copy of the proposal seen by Reuters.
The nearly 600-page proposal would set aside in grants $10 billion for grants to airports, $20 billion for transit systems and about $1 billion for Amtrak. Amtrak and transit systems have warned of massive losses as ridership has dramatically fallen – in some places by 90% – as tens of millions of Americans are ordered to shelter in place and others voluntarily work from home to help slow the spread of the highly contagious disease.
Amtrak has slashed service, while airports say they will lose at least $13.9 billion in 2020 and warn they could default on bond obligations.
The bill provides up to $50 billion in loans or loan guarantees to passenger airlines and $8 billion to cargo carriers.
It also provides $17 billion for businesses “critical to maintaining national security.” Another up to $425 billion is set aside for loans to other businesses hard hit by the pandemic. Airlines “to the extend practicable” would have to maintain existing employment levels while it had unpaid loans.
A spokeswoman for Airlines for America, a trade group representing major U.S. passenger and cargo carriers, said on Sunday that “direct financial assistance is needed immediately – other forms of liquidity are rapidly evaporating.”
Airlines on Saturday made a last-ditch effort to try to get a cash infusion. They had urged that $29 billion of $58 billion sought be in the form of cash grants.
Congressional Democrats said on Sunday there was still no deal and some airline unions sought to convince lawmakers to reverse course.
Airlines had offered not to make any job cuts through Aug. 31 if they won the cash and to accept restrictions on executive pay and forgo paying dividends or stock buybacks.
The global coronavirus outbreak has forced airlines to cancel tens of thousands of flights and resulted in massive revenue losses.
United Airlines (UAL.O), Delta Air Lines (DAL.N), American Airlines Group (AAL.O), FedEx Corp (FDX.N), Southwest Airlines Co (LUV.N), UPS (UPS.N) and others warned on Saturday that “time is running out.”
Unions representing pilots said Sunday they were urging members to write to Congress to advocate for grants, while the Association of Flight Attendants said they were asking members to write, call or Tweet asking specifically for direct relief in the form of grants for payroll.
The bill would allow the U.S. Transportation Department to require carriers to maintain scheduled air service and impose limits on executive compensation for companies receiving government loans or two years. The loans would be for a maximum of five years. Airlines would be barred from stock buybacks or paying dividends and to the “extent practicable” would have to keep existing employment levels.
The Treasury Department could receive warrants, stock, options or other equity instruments as part of government loans but could not exercise voting power on any shares it acquired. Democratic aides criticizes the ban on stock buybacks in the bill, noting it could be waived by Treasury.
The bill also waives some aviation excise taxes, which would boost airlines. Boeing Co (BA.N) had sought at least $60 billion in loan guarantees for the aviation manufacturing sector, but it appears the industry could simply seek loans from the $425 billion fund.
Senator Ted Cruz said on Saturday some were “pushing for a special carve-out just for Boeing & GE.” General Electric (GE.N) said on Sunday it had “not sought any provision that would benefit our company exclusively.”
Source: Read Full Article