American gets most as biggest airlines win bulk of US aid

Five major airlines have received the lion’s share of federal aid Treasury Secretary Steven Mnuchin has approved in the past six weeks as the industry copes with an economy forced to shut down by the coronavirus pandemic.

American Airlines Group Inc. is the biggest recipient, getting $5.8 billion in payroll assistance from the federal government, according to details the Treasury Department released Tuesday.

The agency posted a table listing the participants and some loan details for its airlines payroll assistance program on its website. Mnuchin has approved $25 billion in payroll assistance for 352 applicants, which included contractors, passenger and cargo carriers, the Treasury said.

The data posted is current as of April 27 and accounts for about $23 billion that has gone out from the $35 billion set aside for payroll support. The program, part of the $2.2 trillion virus stimulus passed by Congress, is intended to keep employees at passenger carriers, cargo hauler and airline contractors on the job.

Most of that money was disbursed within a one-week period last month.

An additional $2 billion has been committed for use since the end of April, according to an agency spokeswoman. The website will be continue to be updated.

“Treasury is committed to the highest standards of public transparency as we provide this critical relief,” Mnuchin said in a statement.

Major U.S. airlines, already reeling from a drop of about 95% in passenger totals, absorbed another blow this month when Warren Buffett said Berkshire Hathaway Inc. had exited its stakes. The billionaire investor took positions in American, Delta, United and Southwest in 2016, after years of consolidation left the companies poised to churn out steady profits.

Job cuts

Now, with the pandemic keeping passengers at home, traffic is expected to take as long as three years to recover to 2019 levels.

“The airline business—and I may be wrong and I hope I’m wrong—but I think it’s changed in a very major way,” Buffett said on May 2. “The future is much less clear to me.”

A Standard & Poor’s index of big U.S. carriers tumbled 63% this year through Tuesday—the second-worst decline among industry groups on the S&P 500 index.

Several big carriers have already signaled deep cuts may be needed after that deadline to cope with what’s expected to be a lengthy period of depressed air traffic because of the coronavirus.

The Treasury Department has said airlines can use the payroll-support funds after Oct. 1, even if they commence job cuts.

The Treasury also pointed out that 260 small passenger airlines were also approved for loans, with some of the smallest amounts around $50,000 for companies such as Jannus Air Inc. in Florida and Valley Air Service Inc. in Illinois.

Under the aid law, airlines’ grants were based upon their 2019 payrolls and covers about two thirds of employee expenses.