The airlines had expected to begin receiving
the aid — entirely in cash that didn’t have to
be repaid — from the government to cover
their payrolls by April 6, the deadline set by
Congress. Instead, they found themselves
locked in several days of tense negotiations
with the Treasury Department, which insisted
that only 70% of the aid should be in cash, with
the rest in loans that airlines must repay.
In addition, Treasury demanded that to
compensate taxpayers, the largest airlines
turn over warrants equal to 10% of the loan
amounts. They can be exercised at each
airline’s closing stock price on April 9.
Delta said the government will get warrants
for about 1% of its stock, and Southwest put
Treasury’s warrants at less than 1% of its
shares. Others gave no details.
The nation’s airlines entered 2020 riding a
decade-long hot streak in which together
they earned tens of billions of dollars due
to strong travel demand. That success
came crashing down in just a few weeks, as
governments restricted travel to slow the
spread of the new coronavirus, and people
feared contracting the illness on a plane.
As part of a $2.2 trillion economic-relief
package, Congress also approved a separate
$25 billion program to provide loans to
airlines. Analysts expect less interest because
the airlines can tap private credit markets,
but American said it plans to seek a $4.75
billion government loan, and Alaska Airlines
indicated it too will apply under the
separate program.