WASHINGTON / CHICAGO (Reuters) – The US Senate on Wednesday night voted 96-0 to give the US aviation industry $ 58 billion in a coronavirus rescue package, half in the form of grants to cover paychecks of some 750,000 employees, in a vital lifeline for an industry facing the worst travel slowdown in history.

American Airlines passenger planes clog a runway where they are parked due to flight cuts to slow the spread of coronavirus disease (COVID-19), at Tulsa International Airport in Tulsa, Oklahoma, U.S. United, March 23, 2020. REUTERS / Nick Oxford

The $ 2 trillion economic bailout gives passenger airlines $ 25 billion in grants and $ 25 billion in loans, freight carriers an additional $ 8 billion split between loans and grants, and airport contractors like caterers up to $ 3 billion in grants. The US House of Representatives is expected to vote on Friday to approve the measure and President Donald Trump has promised to sign it into law.

Senate Republicans had fought what they called a donation to airlines and initially only offered loans, while airlines threatened to start firing tens of thousands within days if they didn’t get it. no money.

“This is not a corporate bailout; it’s a lifesaving program for workers, ”said the Association of Flight Attendants Sara Nelson, who pioneered the idea of ​​direct payroll subsidies for employees ranging from maintenance and flight attendants. ‘access to mechanics and pilots.

Reuters reported that Chao worked the phones late into the night to talk to airlines about what they needed to make sure they could maintain the payroll, with a person told on call Tuesday that lawmakers were on the move. point of agreeing on a deal for cash subsidies for payroll and other employee costs after airlines made a last-minute effort to convince lawmakers they needed the money to avoid firing tens of thousands of workers.

Shares of U.S. airlines extended a rally on Tuesday over hopes of cash relief and, according to the bill, airlines are expected to get cash relief in just two weeks.

Republican Senator Pat Toomey, whose party had offered $ 58 billion in loans, said on Wednesday that grants were a key sticking point. He said Democrats insisted that “we give money to airlines and never get it back.”

In a victory for workers, companies that receive funds cannot lay off workers before September 30 or change collective agreements.

The bill has restrictions on share buybacks, dividends and executive compensation, and allows the government to take equity, warrants or other compensation as part of the bailout, but does not require it.

Airlines would also benefit from tax relief on fuel purchases and, to an extent that could lower passenger fares, a temporary suspension of ticket taxes.

As the coronavirus has spread around the world, demand for travel has plummeted, with airlines drastically cutting flights and warning of further cuts to come.

Airlines continue to cancel flights, borrow money, and cut costs as demand declines.

Alaska Airlines said on Wednesday it would cut flights by 70% in April and May, while United Airlines said on Wednesday it would now cut 52% of U.S. flights and overall capacity by 68%. On Tuesday, 279,018 people were screened at all U.S. airport checkpoints, down 87% from last year.

Airlines that accept loans may need to provide certain air services in order to maintain health care and pharmaceutical supply chains, including for remote communities, but other consumer and consumer protections. environment sought after by many Democrats were not included in the bill.

Airlines and unions have secured crucial subsidy support from U.S. Transportation Secretary Elaine Chao, who has worked on the phone late into the night, telling lawmakers and other members of the administration that she was concerned about the impact of job losses and the decline of the US aviation industry on competition, people briefed on the matter said.

“Without subsidies, airlines could be forced to choose bankruptcy over federal loans if loan terms are too rigid,” Chao warned in a note viewed by Reuters.

Airlines have argued they are key to restarting the economy once the coronavirus outbreak subsides.

American airports, whose halls are almost empty, are expected to receive $ 10 billion in subsidies.

The government will also provide $ 25 billion in subsidies for U.S. mass transit systems and $ 1 billion for the U.S. Amtrak Railroad, which has seen ridership drop dramatically as states ordered to tens of millions of Americans to stay at home and avoid non-essential travel.

Boeing Co could receive government loans as part of a $ 17 billion fund earmarked for direct national security-related loans, Toomey said, adding that many companies may be eligible. Boeing could also qualify under the larger $ 454 billion loan program.

“It’s not meant to be exclusively for Boeing… You shouldn’t think of it as a Boeing allowance,” Toomey said.

Boeing had requested at least $ 60 billion in government loan guarantees for itself and the entire aerospace manufacturing industry. Boeing made no comment on Wednesday.

Reporting by David Shepardson, Tracy Rucinski and Doina Chiacu; Edited by Bernadette Baum & Shri Navaratnam


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