Air Freight News

Airline loans would come with conditions under GOP Senate bill

A Senate Republican proposal responding to the fast-spreading economic devastation from the Covid-19 outbreak includes $58 billion for loans to airlines that have seen traffic plummet, but comes with conditions that could ensure they continue providing service.

Passenger carriers would get $50 billion in loans and loan guarantees, while cargo haulers would be eligible for $8 billion.

cargo haulers would be eligible for $8 billion
Cargo haulers would be eligible for $8 billion.

In dollar terms, the total package proposed by Senate leaders matched the request made on Monday by Airlines for America, the trade group for large carriers. However, the industry had sought half of the $58 billion as grants with the remainder in loans. The Senate proposal includes no provision for direct grants.

Airlines for America, a trade group, said the package didn’t go far enough for an industry that “has sustained rapid and severe economic damage” from the pandemic.

“Loans alone are not sufficient and should be coupled with a worker payroll assistance program and targeted tax relief,” the lobbying group said. Such an approach would “allow airlines to keep operating through this crisis and protect the 750,000 jobs of hard-working individuals who are directly employed by the industry.”

The legislation would also suspend for the rest of the year a variety of taxes and fees collected on tickets, fuel and cargo. Those taxes raise the bulk of about $16 billion a year that is set aside to pay for the aviation system.

The Secretary of Transportation would be authorized in the legislation to ensure that airlines continue to make flights that were scheduled as of March 1.

The legislation would also require companies seeking the loans to first agree to cap executive pay at 2019 levels through 2022 and cap so-called golden parachutes to no more than twice an executive’s total compensation last year.

These provisions would apply to executives who earned total pay of more $425,000 in the 2019 calendar year. The provision would not apply to unionized airline workers whose pay was determined by existing collective bargaining agreements.

The proposal permits the federal government to take an equity stake in companies that receive loan assistance, “contingent on the financial success of the eligible business.”

Any gains collected from stakes in airlines would be deposited into the Airport and Airway Trust Fund, which would lose billions of dollars as tax revenue is halted. Proceeds from other companies would go toward the Treasury Department.

Bloomberg
Bloomberg

{afn_job_title}

© Bloomberg
The author’s opinion are not necessarily the opinions of the American Journal of Transportation (AJOT).

Similar Stories

[Freightos Weekly Update] Frontloading continues to put pressure on transpacific rates

Transpacific ocean rates increased slightly last week and are about 15% higher than at the start of December as frontloading ahead of expected tariffs is keeping vessels full.

View Article
https://www.ajot.com/images/uploads/article/American_Airlines_Plane_1.jpg
American Airlines becomes only carrier to fly nonstop between Washington, D.C., and San Antonio
View Article
Open Skies agreement with the Dominican Republic enters into force

The U.S.-Dominican Republic Air Transport Agreement entered into force on December 19. This bilateral agreement establishes a modern civil aviation relationship with the Dominican Republic consistent with U.S. Open Skies…

View Article
https://www.ajot.com/images/uploads/article/WorldACD12202024.png
WorldACD Weekly Air Cargo Trends (week 50) - 2024
View Article
https://www.ajot.com/images/uploads/article/AM_CONNECTS_MIA_CUN_-_DEC_19.jpg
Aeromexico now connects Miami with Cancun
View Article
https://www.ajot.com/images/uploads/article/EUROCONTROL_Aviation.png
EUROCONTROL Aviation long term outlook expects aviation to reach 15.4 million flights in 2050
View Article