Airlines Bailout: Industry Gets Billions From US Government Amid Coronavirus Fallout

As the coronavirus pandemic continues to wreak havoc on the world economy, the airline industry has received a new influx of U.S. government aid.

The Treasury Department on Saturday confirmed it would release an extra $9.5 billion in funds from its Payroll Support Program for use by the country’s airlines. The industry has so far taken $12.4 billion in relief funds.

These funds were distributed to a total of 10 major airline companies and 83 smaller ones. As a condition for receiving these funds, the companies are required not to cut staff or pay until Sept. 30. They are also restricted in terms of executive payments and are not allowed to buy back stock or pay out dividends.

“There is still much about the future and recovery that remains uncertain, and there is a very real possibility that we could be a smaller airline by the end of the year,” SkyWest CEO Chip Childs said in an email to staff obtained by Reuters. SkyWest is expected to receive $438 million in aid.

A total of $25 billion in payroll relief funds were approved by Congress for passenger airlines, one of the business sectors hit the hardest by the outbreak of COVID-19. Any company taking in more than $100 million from these funds will be required to pay 30% of the amount borrowed over 10 years through low-interest loans.

Even with sizeable relief efforts underway, the airline industry is expected to have a slow road to financial recovery. Once the presence of coronavirus sufficiently subsides, industry leaders worry that customers will be slow to regain confidence in flying and slow to reach the level of financial stability necessary to indulge in recreational travel.

“We don’t know when it will happen, but we do know that Delta will be a smaller airline for some time, and we should be prepared for a choppy, sluggish recovery even after the virus is contained,” Delta Airlines CEO Ed Bastian said in a letter to employees recently. “I estimate the recovery period could take two to three years. I hope it’s sooner, but we need to be realistic in our planning.”