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).
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.
