Delta Air Lines has agreed to pay $8.1 million to settle a lawsuit mounted by the US Department of Justice alleging misuse of federal pandemic-relief funds.
The lawsuit alleges Delta had violated conditions relating to a payroll support scheme under the Coronavirus Aid, Relief and Economic Security Act (Cares Act), which was introduced by the US government during the Covid-19 pandemic to provide financial support to companies.
Under the conditions set out, companies accepting federal relief funds must impose compensation caps on executives who earned more than $425,000 in 2019.
Delta, which received $11.9 billion in payroll support funding, has challenged the allegations, which were first surfaced by a whistleblower, adding that it “strongly believes” it had fully complied with the conditions set out in the scheme.
The allegations first came to light through a third-party financial researcher, who subsequently filed a whistleblower lawsuit.
Of the $11.9 billion it received through federal support, the DoJ states that “at least” $8.2 billion were in the form of grants that did not need to be repaid.
“The whistleblower alleged that, between March 2020 and April 2023, Delta paid some corporate officers amounts that exceeded the caps set by the agreements. Delta then allegedly falsely certified its compliance with the caps and failed to notify the Treasury Department of its breach of the agreement,” the DoJ states.
US attorney Theodore Hertzberg adds: “When companies accept federal assistance, especially generous pandemic-relief funds like those at issue here, they owe a duty to the American people to respect the conditions placed on those funds.”
Delta, in a prepared statement following its decision to settle, says it “has consistently maintained the claim is without merit and settled to avoid the expense and distraction of litigation”.
“At issue is a disagreement about a technical matter involving the time periods used to measure executive compensation during the pandemic,” the SkyTeam carrier adds.
This story has been updated to correct the settlement figure.
