Treasury Department says larger airlines have compensate taxpayers

File photo of an almost-empty passenger plane.

Laurel Chor | Getty Images

The country’s largest airlines will have to compensate taxpayers for billions in payroll grants to weather coronavirus, the Treasury Department said Friday, leaving the door open to an aid structure that sparked criticism from labor unions, some lawmakers and industry members.

The Treasury Department has received more than 230 applications from air carriers for payroll grants as the virus and harsh measures to stop it drive down air travel demand to the lowest level in decades. Last week, United, Delta, JetBlue, Spirit and others said they applied for the aid.

Two weeks ago, Congress approved $25 billion in grants for U.S. passenger carriers, $4 billion for cargo airlines and $3 billion for airline contractors, such as caterers, in exchange for not furloughing workers or cutting their pay rates through Sept. 30. Lawmakers also approved $29 billion in loans for airlines.

The Treasury Department was supposed to start making initial payments last Monday to airlines that applied and were approved for the grants, but the process has taken longer than expected as the Treasury Department requested additional financial information from airlines, according to people familiar with the discussions. 

Airline executives have said the drop in demand is more severe than following the Sept. 11 attacks and say they expect the fallout from the pandemic will last into next year if not longer than that.

The Treasury Department on Friday said that it would not require applicants seeking $100 million or less to provide compensation but that it was working with 12 passenger airlines whose allocations would be greater than that amount. Officials have said the compensation could include stock warrants and or other financial instruments.

The department said it would provide guidance to those larger passenger airlines “should total requests for payroll support exceed the maximum amounts awardable under the CARES Act.”

President Donald Trump on Friday said his administration plans to meet with carriers about the aid.

“We have a great plan for the airlines. We’ve got to keep the airlines going,” Trump said at a press briefing. “It’s never been a great business but it’s a vital business for the country.”

The delays in getting the aid to the ailing carriers has sparked concern among some airline unions and lawmakers.

“Congress acted two weeks ago. That’s a pay period,” Sara Nelson, president of the Association of Flight Attendants, which represents some 50,000 cabin crew members, tweeted at Secretary Mnuchin on Friday. “Cut the checks.”

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