Congress deserves credit for moving quickly here. Airlines need the money as fast as possible.
U.S. lawmakers are nearing agreement on a package of grants for passenger and cargo airlines and contractors worth $32 billion as part of a massive U.S. stimulus and rescue package amid the massive travel demand falloff because of the coronavirus outbreak, three people briefed on the matter said.
The deal is expected to include $25 billion in grants for passenger airlines, $4 billion in grants for cargo carriers and $3 billion for contractors like caterers. All funds would be directed toward payroll costs. The final deal is also expected to include another $29 billion in loans for passenger and cargo airlines. Airlines have warned that without cash grants they could be forced to layoff hundreds of thousands of people as U.S. travel demand has collapsed.
After a Senate Republican version released on Sunday rejected grants and only approved $58 billion in loans, airlines and unions made a forceful push for grants arguing that it was essential to keep workers on the payroll and won the strong backing of House Democrats, which proposed $40 billion in cash grants on Monday.
In a last-ditch effort, airlines offered to keep all workers on board until at least Aug. 31 if they received $25 billion in grants.
Airlines previously agreed to forgo stock buybacks and dividends and limit executive compensation if they won cash grants. It is unclear if Treasury will be able to demand equity as a condition of the assistance.
U.S. airline stocks rose sharply on optimism a deal was near. American Airlines Group Inc rose 35% to $13.90, Delta Air Lines jumped 22%, United Airlines rose 25% and JetBlue Airways Corp rose 30%. (Reporting by David Shepardson Editing by Chizu Nomiyama and Sandra Maler)
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Photo credit: U.S. lawmakers are a near a deal on a plan to bail out airlines. Pictured are American Airlines jets. Angus Mordan / Bloomberg