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U.S. airlines begin negotiations for coronavirus aid focused on front-line workers

A flight board at Baltimore-Washington International Marshall Airport last week.
A flight board at Baltimore-Washington International Marshall Airport last week. (Jonathan Newton/The Washington Post)
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More than a half-dozen U.S. carriers have applied for federal relief money to help keep them running and their front-line workers on the job amid the unprecedented drop in airline traffic caused by the novel coronavirus.

American, Delta, JetBlue, Southwest, Spirit and United are among the airlines that filed applications by the Friday deadline guaranteeing them fast consideration for their share of the $2 trillion economic rescue package approved by Congress last month.

Carriers will now work with the Treasury Department to negotiate the terms of a possible deal.

A spokesman for Southwest Airlines confirmed that the carrier had submitted an application but, citing confidentiality around ongoing negotiations, said the airline would provide no additional details.

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“The applications are not public, and we are not at liberty to discuss the details as the next several days could involve conversations regarding the terms of an agreement,” spokesman Chris Mainz said via email. “This is a brand-new program and is happening very quickly so it would be difficult to speak to timing or details in process at this time.”

In a statement that accompanied its Friday filing, United said the money would help protect the paychecks of more than 93,000 employees.

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“The financial assistance provided by the CARES Act will ensure our pilots, flight attendants, airport and contact center agents, ramp service, technicians and others remain on the front lines and are able to provide the vital air service that gets Americans home and delivers much needed goods around the country — including food, medical equipment and front-line health care provider protective gear — as we come together to fight COVID-19,” the United statement said.

Among the provisions of the Cares Act, which President Trump signed into law March 27, are those that would provide $29 billion in grants to airlines for payroll support — $25 billion to passenger carriers and $4 billion to cargo operators. In addition, the legislation provides $25 billion in loans or loan guarantees.

Whether carriers applied for grants, loans or both was not clear. Delta and Alaska Airlines indicated in filings with the Securities and Exchange Commission that they applied only for grants. Southwest also said it had applied for grant money. The rescue law requires the Treasury Department to disclose any loans within 72 hours.

The money, however, does not come without strings.

Companies receiving the grants would be barred from furloughing workers until Sept. 30 and could not issue dividends or buy back their stock until late 2021. They also would be required to maintain service levels as far out as 2022 — a condition that has brought pushback from some carriers that argue it does not take into account services that run only seasonally. Meanwhile, some airports have objected to conditions outlined by the Transportation Department that would allow airlines to consolidate some routes, saying that could hamper the ability to get personnel or supplies to areas in need of aid.

Labor groups and some Democratic lawmakers also raised objections about the Trump administration’s position that it might take an equity stake in airlines that accept government money, saying such a provision could prompt carriers to reject the money.

The aviation industry pushed hard for relief, citing dramatic drops in air travel in the wake of flight restrictions imposed by the United States and governments around the world to control the spread of the virus. Some carriers have slashed service by more than 80 percent, and some flights are operating with only a handful of passengers aboard.

An example of how passenger traffic has evaporated: According to the Transportation Security Administration, its officers screened just over 122,000 people on Sunday, compared with 2,462,929 on the same day in 2019.

However, the money could still come too late for some carriers, particularly smaller regional airlines.

On Sunday, RavnAir, a regional carrier in Alaska, announced that it was grounding its 72 planes and laying off its employees temporarily as it files for bankruptcy and seeks aid from the rescue package.

“We took these actions to ensure our airline has a future,” chief executive Dave Pflieger wrote in a letter to customers.

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Under the act, airlines are eligible to receive payouts equal to their payroll costs between April and October of last year. That puts Delta and American in line to receive a maximum of almost $7 billion each, with an additional $6.5 billion for United, according to data published by the Transportation Department. Southwest could get up to almost $4.3 billion; JetBlue and Alaska are each in line to see more than $1 billion each.

However, the $31 billion in total wages and benefits paid by airlines in those six months is more than the total amount in the bailout package. The Treasury Department is allowed to reduce the individual awards if the $25 billion fund comes up short, according to an application form released last week.

Delta said in a message to employees that it filed for its share of the money Friday morning. But the airline said it expects its revenue to be down 90 percent in the second quarter of the year and that without more cost-cutting actions and efforts to raise new financing, the government money would be gone by June. The message said that 30,000 of the company’s 90,000 employees have volunteered for unpaid leave and that it was looking for more people to come forward.

“That is the most important action you can take to support our company,” the message said. “Please consider whether a short- or long-term leave makes sense for you and your family at this time.”

In a disclosure to the SEC filed Monday, Alaska Air Group said its subsidiaries Alaska Airlines and Horizon Air Industries had both applied for the payroll grants. McGee Air Services, a ground-services company that is a subsidiary of Alaska Airlines, has also applied, according to the disclosure.

The group said that demand is down 80 percent and that it would cut its capacity by the same amount for April and May, saying that “given current trends and circumstances, it is our expectation that sizable cuts will be necessary for the coming months.”