US carrier Delta Air Lines will receive $5.4 billion in emergency funding through the CARES Act’s payroll support programme.
The funding includes an unsecured 10-year low-interest loan of $1.6 billion, Delta states. The Atlanta-based airline will also provide the government with warrants to acquire about 1% of Delta stock at $24.39 per share over five years.
Delta will be prohibited from administering involuntary furloughs or pay-rate reductions through 30 September, the primary condition of accepting CARES Act payroll assistance.
The airline reports a 95% decline in passenger traffic since the coronavirus pandemic began and has reduced its flight schedule by 80%. It raised more than $3 billion in additional capital in the first quarter of this year, and improved its liquidity through the voluntary furloughs of 35,000 employees.
“These steps, taken together, are vital to protecting Delta’s future over the next several months as we operate a minimal schedule to provide essential services for those who must travel,” chief executive Ed Bastian says.
On 14 April, the US Treasury Department named the airlines which had applied for CARES Act payroll support, and said it was still discussing aid with other carriers.
”Alaska Airlines, Allegiant Air, American Airlines, Delta Air Lines, Frontier Airlines, Hawaiian Airlines, JetBlue Airways, United Airlines, SkyWest Airlines and Southwest Airlines have told us that they plan to participate in the payroll support programme,” Treasury Secretary Steven Mnuchin stated on 14 April.