WASHINGTON/CHICAGO (Reuters) – U.S. Treasury Secretary Steve Mnuchin said he plans to brief President Donald Trump at the White House on Thursday about the government’s review of requests for $32 billion in grants from passenger airlines, cargo carriers and airport contractors.
FILE PHOTO: Treasury Secretary Steve Mnuchin takes a phone call in the hall outside a meeting to wrap up work on coronavirus economic aid legislation to prevent the spread of coronavirus disease (COVID-19) in Washington, U.S., March 21, 2020. REUTERS/Mary F. Calvert
“We hope to get to a lot of the airlines starting tomorrow and over the weekend with preliminary information. And it is our objective to make sure, as I’ve said, this is not a bailout, but that airlines have the liquidity to keep their workers in place. So that’s the next big thing we’ll be rolling out,” Mnuchin said in an interview with CNBC.
Also expected to attend the 4 p.m. meeting with Trump are White House economic adviser Larry Kudlow and Transportation Secretary Elaine Chao. Passenger airlines are eligible for $25 billion in cash grants for payroll; cargo carriers can get $4 billion in cash grants. Airport contractors like caterers and airplane cleaners are eligible for $3 billion in grants.
Treasury has been considering taking equity or warrants as part of taxpayer compensation, two sources briefed on the matter said.
The Southwest pilots union said it expects to hear next week whether airlines will accept Treasury’s proposed grant terms.
Mnuchin has repeatedly said taxpayers will be compensated for the grants, but airline unions and some Democrats have urged him not to demand equity or warrants.
The six largest U.S. airlines — including American Airlines Group (AAL.O), United Airlines (UAL.O), Delta Air Lines (DAL.N) and Southwest Airlines Co (LUV.N) — are expected to get the majority of the grants, the sources said.
Airlines are eligible for cash equal to the compensation paid to employees from April 1-Sept. 30, 2019, but Treasury is not expected to pay the full amount of grants those airlines seek because the value of requests it plans to approve exceeded $25 billion, the sources said.
As talks have gone on, Treasury asked airlines seeking government payroll support to provide additional detailed information on capital structure, liquidity and loyalty programs, people briefed on the matter told Reuters Wednesday.
Treasury has also asked for details such as airlines’ daily cash burn rates, when they expect to run out of cash and their best estimates for projected wages and benefits between April 1 and Sept. 30, they said.
Treasury has also requested information on the value and historical cash flow of airlines’ loyalty programs, as well as an overview of all unencumbered assets such as aircraft, engines and spare parts.
Airlines keep slashing flights as travel demand has dwindled to less than 5% of normal levels. On Wednesday, the number of people screened at U.S. airports fell to a new low of 94,931, down from a normal 2.23 million.
On Wednesday, JetBlue Airways Corp (JBLU.O) asked the U.S. Transportation Department for emergency approval to temporarily suspend service to 11 U.S. airports, including Dallas, Houston and Minneapolis. It also announced it was consolidating flights in five U.S. metropolitan areas and suspending flights at Baltimore, Providence, New York LaGuardia and San Jose airports.
Reporting by David Shepardson and Tracy Rucinski; additional reporting by Doina Chiacu and Steve Holland; Editing by David Gregorio