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The US Airline Industry Will Receive a $25 Billion Bailout

by Eben Diskin Apr 16, 2020

To give the travel industry a much-needed lift as it attempts to stay afloat during the COVID-19 pandemic, the US government has agreed to a $25 billion bailout for airlines. As part of the $2.2 trillion economic stabilization package agreed upon last month, passenger airlines will receive direct aid to allow them to continue paying salaries and benefits to employees.

The aid won’t completely alleviate the industry’s pain, however, with the International Air Transport Association predicting airlines will lose $314 billion in revenue this year. All major airlines will receive grants, including American, Delta, Southwest, JetBlue, and United. However, these won’t come without a catch; thirty percent of the amount will be considered loans which will need to be repaid to the government, and airlines must offer stock options on a portion of the funds, allowing the government to purchase shares of the airlines.

In a statement, Treasury Secretary Steven Mnuchin said, “We welcome the news that a number of major airlines intend to participate in the payroll support program. This is an important Cares Act program that will support American workers and help preserve the strategic importance of the airline industry while allowing for appropriate compensation to the taxpayers.”

According to CNN, airlines and the Transport Security Administration reported a 96 percent drop in passenger traffic at the start of April 2020 compared to the same time last year.

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