Airline $25bn Bailout: Part Grants, Part Loans
April 15, 2020

The details of the agreement between the Treasury Department and the biggest US airlines have come into focus after striking a deal on a ~$25bn relief package.

The terms, anxiously awaited on by the public, seem to do little to appease the skeptics who are calling for a much harder line on the beleaguered industry. Ultimately, the agreement calls for aid to come predominantly in the form of grants and a smaller portion in low-interest loans. The treasury is also receiving warrants to buy equity in certain of the airlines.

JetBlue provided the following graphic: 73% of their bailout funds will be forgiven, a fairly substantial number. The government’s contention is that this portion will ultimately benefit tax payers (via reduced unemployment, tax breaks).

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As part of Delta’s $5.4B in aid, they will provide the government with warrants to acquire about 1% of Delta stock at $24.39 per share over five years – for context, Delta is currently trading ~$24.

Other reported general stipulations include:

  • Restricting share repurchases or dividends until 2021
  • Restrictions on layoffs thru September
  • Limits on executive compensation until March 2022

Here are what some of the airlines are reported to have received:

  • AAL: $5.8B
  • DAL: $5.4B
  • LUV: $3.2B
  • JBLU: $935.8M

We’ll continue to be tracking all of this in our COVID-19 tracker for US Public companies.

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