Tag Archives for bailout.
President Trump has an idea to help the airlines make it through to the future, while getting a deal for taxpayers: pay up front for several years of travel, but get a bigger discount from the airlines for doing it.
Avatar Airlines applied for $15 million in CARES Act funding seeking a portion of the federal airline bailout – even though by their own admission they “have no flights, no overhead, administrative expense, or fixed costs at the present time.”
So far $2.9 out of $25 billion has been disbursed “to 54 smaller passenger carrier and two major passenger airlines,” and agreements have been reached with Allegiant, American, Delta, Southwest, Spirit and United.
It turns out the government has put itself on a payment plan to fulfill its bailout commitments.
The airline bailout provided cash to continue to pay employees. They aren’t allowed to involuntarily lay off employees or reduce rates of pay through September 30. However one U.S. airline found a workaround: requiring unpaid time off. That way they keep the money to protect shareholders at the expense of employees.
American Airlines announced that it will receive a $5.8 billion bailout: $4.1 billion grant, and $1.7 billion loan. They will also apply for a separate $4.75 billion loan.
Southwest Airlines announced that it will receive $3.2 billion: a $2.3 billion grant and a $1 billion loan.
The way the law was written the administration doesn’t have to just give away all the money. While the industry and Democratic senators (at the behest of airline unions) have argued that the money shouldn’t come with requirements, the Treasury Secretary reportedly placed a call to airline CEOs laying out the requirements for the $25 billion in payroll grants.
If airlines are going to receive a bailout, taxpayers should receive some assurance of recovering the funds when times are good. And any deal should be structured to incentivize airlines to get out from under partial nationalization as quickly as possible.
The Treasury Department is asking airlines seeking bailout funds to detail the economics of their frequent flyer programs as one source of collateral.
Israel’s Ministry of Finance turned down El Al’s request for a $350 million government-backed loan. In explaining the decision, the finance ministry said it “did not believe El Al would be able to repay” the money.
El Al has suspended all commercial flights and is operating only cargo and government-sponsored repatriation flights.
Delta can’t take government money and furlough pilots. Without the ability to furlough pilots they can’t get pilots to agree to cuts. And pilots getting full pay while everyone else suffers is going to make it hard for Delta to make the case to other work groups to remain non-union.
The federal Paperwork Reduction Act Notice estimates that your request for billions of dollars should take just two hours to complete. So out of those of you with a good faith belief that you’re an airline contractor under the Act, who’s in? You can just submit a request for funds by e-mail.
Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel -- a topic he has covered since 2002.
Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »
