5 key elements of the $50 billion airline aid package

Mar 27, 2020

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The House of Representatives passed a $2 trillion aid package Friday to help the American economy stay afloat through the coronavirus pandemic.

The Senate passed the legislation earlier this week and it’s expected to be signed into law by President Trump imminently.

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Included in the $2 trillion pot is $50 billion in aid earmarked for airlines. Here are five things to know about how that aid is structured, and how it can be used:

1. It’s meant to help airline workers

$25 billion — half of the total aid to airlines — is set to help cover airline employees’ salaries through September. That money is structured as a grant, which means the airlines won’t have to repay it even after the pandemic passes. In addition, the funds can’t be used to pay executive salaries.

Read more: An in-depth analysis of the $50 billion aid package to airlines.

2. The government will give airlines loans if they have to

The other $25 billion in the aid package will be structured as loans. Airlines will eventually have to pay that money back if they choose to take it, and it comes with some other restrictions as well. The government could take an ownership stake in airlines that receive government-backed loans.

Analysts think most airlines will treat these loans as a last resort because of the conditions. They’re seen more as a way for the government to express confidence in the industry, and encourage private banks to give struggling airlines funds if needed.

3. Cities will keep their service

The legislation requires airlines to maintain flights in every U.S. airport they currently serve for a fixed period as a condition of receiving some of the aid. That doesn’t necessarily mean airports will have the same level of service, but it should help keep the transportation network relatively stable in the near-term.

Related: What the airline aid package means for travelers.

4. No major changes for travelers

Many passenger advocates had hoped that the bill would include new regulations on inflight service, fees, amenities, or even minimum seat dimensions. The aid package includes no such restrictions though, so travelers are unlikely to see any major changes to their travel experience, but it’s likely that the airlines will emerge from this crisis with changed business models once the dust settles.

5. No favors for Wall Street

Previous government aid packages for airlines have been under strong criticism in recent days for allowing companies to use the funds for stock buybacks and other payments to investors. This package explicitly prohibits taxpayer funds from being used for those purposes.

Related: Coronavirus-related waivers and schedule changes in effect at U.S. airlines.

Featured photo by Patrick T. Fallon/Bloomberg/Getty Images.

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