Airlines to hear about their bailout applications by Friday: Mnuchin
American Airlines passenger planes crowd a runway where they are parked due to flight reductions to slow the spread of coronavirus disease (COVID-19), at Tulsa International Airport in Tulsa, Oklahoma, U.S. March 23, 2020.
Nick Oxford | REUTERS
Treasury Secretary Steven Mnuchin said Thursday that he hopes to begin offering “preliminary information” to airlines about their applications for government assistance starting Friday to help stem the pain from the coronavirus pandemic.
“We hope to get to a lot of the airlines starting tomorrow and over the weekend with preliminary information,” Mnuchin said in an interview on CNBC.
Major airlines last Friday, including Delta, JetBlue, American, United and Spirit, said they had applied for federal aid aimed at covering payroll, as instructed by the administration. Those grants were approved as part of a more than $2 trillion relief package passed by Congress late last month. The bill also offered $29 billion in loans to passenger and cargo airlines, but grants have taken first priority as the government hopes to save jobs and airlines hemorrhage cash.
“It is our objective, to make sure that I’ve said this is not a bailout, but airlines have the liquidity to keep their workers in place. So that’s the next big thing we’ll be rolling out,” Mnuchin said.
Already, the government has missed the Monday deadline set by the $2 trillion bill to send out initial payments to airlines and cargo carriers.
The ongoing negotiations risk being held up further as airlines fight for better terms, and the Treasury looks to avoid the appearance of giving a hand out to big companies. The relief package negotiated by Congress said the Treasury may demand financial instruments, like warrants, along with the grants. Lawmakers, unions and others have warned against the Treasury making any equity demand that airlines deem unsustainable.
Friday’s grant applications included airlines’ proposals for the amount and structure of the requested relief, which are now being assessed by the Treasury and its financial advisors. The Treasury has also sought additional information after initial uncertainty from among airline executives and their advisors about the level of detail the department would demand around issues like capital access and business plans.
Those additional requests were criticized by Democrats.
“Treasury’s preliminary guidance failed to provide applicants with clear direction on a number of critical items, including application procedures for employers that operate a parent company with subsidiaries,” wrote Sens. Tammy Duckworth and Dick Durbin, Illinois Democrats, to Mnuchin on Wednesday.
“Given the lack of clear direction early in the process and because many stakeholders must now submit corrected applications that comply with the instructions they received late on Friday, we would like your assurance that evaluation of these applications will not be delayed,” they wrote.
On Sunday, leading Democrats including House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer wrote Mnuchin to urge him to eschew any demands that may delay coming to a deal, putting jobs at risk.
— CNBC’s Leslie Josephs contributed to this report.