The Treasury Department announced yesterday that it had signed letters of intent with five airlines for additional loans compared to those already received in April. All the details on United Airlines, American, Spirit, Frontier, Hawaiian and SkyWest.
When an entire sector plunges – and this is certainly the case with air transport in America, which fell 95% between March and April – there is usually only one way to avoid the worst: state intervention. And America did it yesterday for the second time since the pandemic began.
Airlines are not companies like any other. The functioning of so many other things in our complex society depends on their regular functioning. Hence the generosity of the Congress, which in the first stimulus package voted in April, received 50 billion dollars in aid and loans, plus another 8 billion for the cargo sector alone.
Almost three months after the first measure, with air traffic slightly recovering but still nailed to -75% compared to last year, the companies have returned to gasping and asking for a new injection of liquidity, meeting with Washington’s favor.
The Treasury Department announced yesterday that it had signed letters of intent with five airlines for additional loans compared to those already received in April: these are American Airlines, Spirit Airlines, Frontier Airlines, Hawaiian Airlines and SkyWest Airlines.
The companies in question would be the first to take advantage of a $ 25 billion special fund created as a precaution in the April stimulus package. This means, as Treasury Secretary Steven Mnuchin has admitted, that negotiations are also underway with other airlines, one of which – United Airlines – has already made it known that it also intends to access the loans.
The details of the new loan, including the individual amounts and the repayment terms, are very meager: the Treasury Department has simply made it known that it would make the relevant documents public 72 hours after reaching the final agreement, which means that they could spend whole weeks.
The American Airlines CEO and the president of the company, Doug Parker and Robert Isom, have however announced that they have signed a preliminary for a loan of 4.75 billion dollars, which must be added to the 5.8 already received in April by the Treasury . “We have to complete,” they said, “some legal aspects to reach a definitive agreement on a loan, but we plan to finalize it within the third quarter.”
A spokeswoman for SkyWest instead told the media that her company is still “evaluating our level of participation with the Treasury”.
It remains to be seen whether this new injection of liquidity will be sufficient to ward off the worst. Among economists, pessimism prevails, especially for employment levels, which may soon plummet. It is estimated that the only American Airlines alone has by now an excess of 20,000 workers compared to the flights it can carry out this autumn, and Delta has recently made it known that it could soon fire 2,500 of its pilots.
It is for this reason that six air unions have asked the C0ngresso for another 25 billion dollars to prevent a massacre of workers this autumn and winter.
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