Friday 29 Mar 2024
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DALLAS/WASHINGTON (April 10): US airlines battered by the coronavirus pandemic are now being told they’ll have to wait at least another week for help covering payrolls as the US Treasury Department makes its way through applications.

Treasury officials informed at least some of the carriers Thursday that it won’t provide funds until negotiations over conditions for the grants are complete, and there will be no advance payments, said people familiar with the matter who asked not to be named because the talks are private. The agency thinks it should complete some applications by the end of next week, they said.

The delay builds on the frustration of airlines that initially expected to receive funds earlier this week but instead were asked by federal officials for additional, detailed financial and operational data. Some of those carriers are depending on federal funds to meet payroll obligations next week and face the prospect of furloughing workers. But doing so would render them ineligible for a grant.

A Treasury spokeswoman declined to comment on the discussions with carriers.

Earlier Thursday, Treasury Secretary Steven Mnuchin said the agency would provide preliminary details to airlines on how to access the grants and an additional pool of government loans within days.

No Bailout

The airline aid is “the next big thing we’ll be rolling out,” Mnuchin said on CNBC. “We hope to get to a lot of the airlines starting tomorrow and over the weekend with preliminary information.”

Mnuchin reiterated that the grants are not a bailout for carriers. The government wants to make sure companies “have the liquidity to keep their workers in place,” he said. Both passenger and cargo airlines have applied for grants.

Concern is growing among airlines as time passes and pressures grow to make decisions on whether to begin furloughs, said another person familiar with the Treasury talks. Many airlines weren’t told what to expect on the timing of grants, said the person, who wasn’t authorized to speak about the private discussions.

The trade group representing large carriers, Airlines for America, said in a statement that the industry is projected to burn through $10 to $12 billion per month.

“We remain hopeful that Treasury will act expeditiously to release Direct Payroll Assistance funds – with as few restrictions as possible – to help U.S. airlines protect their 750,000 jobs, which is critically important amid our country’s record unemployment claims,” the group said.

Clarity Needed

Faye Malarkey Black, president of the Regional Airline Association, a trade group representing smaller carriers flying under contract for the larger airlines, said she welcomed Mnuchin’s promise to get more clarity to the industry, but time is running short for her members.

“Information is vitally needed, but we need the payroll assistance,” Black said. “The liquidity crisis is real. Every day that we wait for the grants, we’re burning cash.”

The legislation says Mnuchin must make initial payments “not later than 10 days after the date of enactment,” which was March 27, making the deadline April 6. Airlines have taken that to mean that Treasury hasn’t lived up to the law’s mandated timing.

However, the wording of the law says the payments can’t be made unless applications are approved by Mnuchin and there have been no approvals so far. It’s also not clear how any violation would be enforced.

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