Coronavirus Bailout: Airlines finally get the billions they have been waiting for from the U.S Treasury

The federal government made a promise to bail out the airline companies following the coronavirus financial damages. It took a while for both sides to agree on term but the money is finally available to the Airline companies. Many transportation companies and Airline companies are heavily affected financially with the travel ban order that was put in place by the federal government. The travel ban was introduced in other to help stop the spread of the virus. Many Airline companies lost a lot of money and some were forced to lay people off. 

The ban cost the airlines millions of dollars in losses daily, as a result, they went to the government to scramble for a bailout so they can stay in business. 

The negotiation took a long time before they were finally awarded $25 billion in loans and grants. In addition to the $25 billion loan/grant, the United State treasury was awarded the right to buy airline stocks. With this plan in place, investors may be a little relaxed since their investments will be indirectly backed by the U.S. Treasury’s ability to be able to buy stocks as needed to prevent the Airline stocks from tanking. 

The agreement was reached on April 15, 2020, and Airline stocks picked up almost instantly after the news broke. According to our findings, the $25 billion is an emergency fund and it will come in the form of payroll grants and low-interest loans. The plan will guarantee that Employees’ jobs and salaries are protected from now until September 30. As stated above, the U.S. Treasury also gets the warrants to acquire stock. 

In the deal, the Airlines agreed on stock buybacks limitation, dividends, and executive compensation.  

List of Airlines that have confirmed that they will participate in the payroll support program. 

• Alaska Airlines
• Allegiant Air
• American Airlines
• Delta Air Lines
• Frontier Airlines
• Hawaiian Airlines
• JetBlue Airways
• United Airlines
• SkyWest Airlines
• Southwest Airlines

How much does Each Airline get in the Coronavirus Emergency aid money

• $5.8 billion will go to American Airlines (AAL). Out of which $4.1 billion will go to the company in a form of direct support. The Treasury gave American Airlines $1.7 billion in low-interest loan and $4.75 billion of the total amount is in the form of a loan that American Airlines is expected to pay back to the Treasury. 
• $5.4 billion will go to Delta (DAL). Out of which $3.8 billion will go to the company in a form of direct support. The Treasury gave American Arline $1.6 billion in low-interest loan. Also, the U.S. Treasury will be allowed to exercise the right to acquire close to 1% of Delta Airline stocks at $24.39 over the next 5 years. 
• $935.8 million will go to JetBlue Airlines (JBLU). Out of which $685.1 million will go to the company in a form of direct support. The Treasury gave JetBlue $250.7 million in low-interest loan.
• $3.2 billion goes to Southwest Airlines (LUV), $2.3 billion in a form of direct support, with close to $1 billion low-interest loan. The loan comes with about 2.6 million warrants issued to the government)
• $992 million goes to Alaska Airlines (ALK), $267 million in low-interest loan. Treasury will also receive the right to buy 847,000 non-voting shares of Alaska Air Group at $31.61 per share.

 If Coronavirus slows down then the help will be beneficial to the airlines and it will also be rewarding to the federal government, if the government decides to take advantage of the share buying plan. However, if the virus can not be contained, this help may not be as effective.  

 "Passenger volume is down 97%, equating to a customer level we have not seen since 1954," CEO Nicholas E. Calio, the president of Airlines for America. 

When the coronavirus pandemic is over, Airplane ticket booking is expected to pick back up and the grounded airplanes will be back in the sky. Investors who hold on to their stocks or those who bought Airline stocks during this pandemic may enjoy Airline stocks in the future.