The US Treasury Department will not require carriers that will receive under $100 million in federal payroll grants to provide equity as a condition attached to the coronavirus relief funding following complaints from regional airlines about their unique financial challenges.
The decision may simplify matters for SkyWest Airlines, which on 13 April disclosed that it applied for payroll support from the CARES Act. The Utah-based carrier, which operates flights through codeshare arrangements with American Airlines, Delta Air Lines, United Airlines and Alaska Airlines, applied for funds on 3 April, a deadline the Treasury said would ensure quick approval.
Recipients of the federal aid will have to meet conditions through 30 September, which include bans against furloughing workers, reducing pay and benefits, stock buybacks and pay dividends. To comply with these conditions, SkyWest has suspended future dividends and share repurchase activity.
The Utah-based airline signaled that it expects schedule block hours for April to be down 50% and expects May to be down “slightly more” because of the coronavirus downturn.
Despite promises of quick approval, the Treasury and the US Department of Transportation on 10 April said they are still finalizing details to roll out funds for more than 230 applications for payroll support from passenger airlines.
“The majority of these [airline grant] requests seek less than $10 million,” the Treasury says in a statement.
The Treasury says it is currently working with twelve carriers - whose allocated payments are expected to exceed $100 million - “to secure appropriate financial instruments to compensate taxpayers”.
The Regional Airline Association in March petitioned the Treasury to adjust its stimulus conditions for regional carriers out of concern that requests for payroll assistance from carriers would exceed $25 billion and asked it to ensure smaller airlines would receive funds.