American Airlines To Receive $5.8 Billion from U.S. Department of the Treasury
American Airlines announced today that it will receive $5.8 billion in financial assistance from the U.S. Department of the Treasury. This is part of the Payroll Support Program (PSP) created through the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The funds, which are targeted to support team member salaries and benefits, will come in two forms: a direct grant of $4.1 billion, and a low-interest rate loan of $1.7 billion. In addition to the $5.8 billion, American expects to separately apply for a loan from the U.S. Treasury of approximately $4.75 billion.
“The Payroll Support Program recognizes the extraordinary dedication of our entire team, and importantly, sustains the critical air service being provided by our frontline team members,” said American Airlines Chairman and CEO Doug Parker. “Those team members are our heroes, and we are elated that this program will enable us to continue to employ and pay our team while they fly through this period of depressed consumer demand”
The announcement says that PSP protects American’s team members from involuntary furloughs or pay rate reductions through Sept. 30, 2020, at which point demand for air travel will have hopefully recovered. The airline has also agreed to limitations on stock buybacks, dividends and executive compensation.