Airlines and Treasury Department reach agreement on coronavirus aid

Airlines and Treasury Department reach agreement on coronavirus aid
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Major U.S. airlines have reached an agreement with the Treasury Department to accept billions of dollars in coronavirus stimulus funds, the department announced Tuesday.

Treasury Secretary Steven MnuchinSteven Terner MnuchinOn The Money: Economy adds 4.8M jobs in June | Unemployment to average 6.1 percent through 2030: CBO | Mnuchin says no regrets on pushing to reopen Treasury approves 0 million loan to company being sued for overcharging Pentagon US no longer 'flattening the curve' of coronavirus pandemic, administration official says MORE said in a statement that he and the department “welcome the news” that 10 airlines have agreed to participate in the program. The airlines applied for parts of $25 billion in payroll grants.

The initiative was created through the third coronavirus stimulus bill and requires the airlines to agree not to furlough or cut the pay rates of employees through Sept. 30. 

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“This is an important CARES Act program that will support American workers and help preserve the strategic importance of the airline industry while allowing for appropriate compensation to the taxpayers,” he said in the statement. 

Alaska Airlines, Allegiant Air, American Airlines, Delta Air Lines, Frontier Airlines, Hawaiian Airlines, JetBlue Airways, United Airlines, SkyWest Airlines and Southwest Airlines will all take part in the program, Mnuchin said. 

The secretary added that other airlines may join the program, and the department is reviewing applications for smaller passenger air carriers “as quickly as possible.” 

“We look forward to working with the airlines to finalize the necessary agreements and disburse funds as quickly as possible,” he added.

Two people familiar with the discussions told CNBC that airlines could provide details on the aid as early as Tuesday. The program will also require participants to pay back 30 percent of the grants, sources told the news outlet, despite objections to the stimulus package being structured on loans. 

The coronavirus pandemic has massively impacted the travel industry as much of the world and country remain under stay-at-home orders or lockdowns. Several countries have also instituted travel bans to nations abroad. 

This has led to the airlines grounding hundreds of their flights and putting thousands of their employees on unpaid leave during the crisis.