American, Delta, United among first applicants for coronavirus aid

Apr 3, 2020

This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. Terms apply to the offers listed on this page. For an explanation of our Advertising Policy, visit this page.

Many U.S. airlines submitted applications for the $25 billion in grants available to airlines under the government’s CARES Act that aims to offset some of the economic toll the novel coronavirus pandemic has taken on the industry.

Alaska Airlines, American Airlines, regional Cape Air, Delta Air Lines, Hawaiian Airlines, JetBlue Airways, Southwest Airlines, Spirit Airlines and United Airlines were among the first to apply for the funds that can be used for employee payroll and benefits on Friday, the companies confirmed. None of the airlines indicated whether they had applied for the $25 billion in loans that are also available from the government.

“This law keeps paychecks coming and it buys us time,” JetBlue CEO Robin Hayes told staff in a memo Friday. “Securing jobs, even at reduced total pay, is my priority right now.”

Get Coronavirus travel updates. Stay on top of industry impacts, flight cancellations, and more.

Airlines around the world are digging into their savings accounts the number of people flying falls to near zero. The International Air Transport Association (IATA) has warned of a cash crunch that could prompt the collapse of half of the world’s carriers if governments do not intervene.

JetBlue is burning around $10 million in cash a day and Delta roughly $60 million the airlines have said. Both have cut capacity by at least 70% in April to slow the bleeding, and sought new debt from lenders to bolster balance sheets.

For U.S. airlines, the CARES Act funds are a “game extender,” as Evercore analyst Duane Pfennigwerth put it in March. The grants are earmarked for non-executive compensation while the loans can be used for other fixed costs. All of the funds come with strings, including barring involuntary furloughs through Sept. 30, requiring that air service continues across the country, and limiting investor returns and executive compensation.

Related: Airlines will have to meet these schedule requirements to get coronavirus aid

Delta CEO Ed Bastian, in his own communique to staff Friday, said the airline is flying roughly 6% of the number of passengers that it flew this time last year. He warned that they “still haven’t seen the bottom.”

The CARES Act “funds alone are not nearly enough. We are expecting our revenue in the second quarter to be down 90 percent,” said Bastian.

The government had set an initial deadline of 5 p.m. ET on Friday for airlines to submit their earliest round of grant requests.

Related: What you need to know about the $50B coronavirus aid package to airlines

Updated with comments from Alaska Airlines, Hawaiian Airlines, Spirit Airlines and Southwest Airlines.

Feature image courtesy of American Airlines.

Chase Sapphire Preferred® Card

WELCOME OFFER: 80,000 Points

TPG'S BONUS VALUATION*: $1,600

CARD HIGHLIGHTS: 2X points on all travel and dining, points transferrable to over a dozen travel partners

*Bonus value is an estimated value calculated by TPG and not the card issuer. View our latest valuations here.

Apply Now
More Things to Know
  • Earn 80,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $1,000 toward travel when you redeem through Chase Ultimate Rewards®.
  • 2X points on travel and dining at restaurants worldwide, eligible delivery services, takeout and dining out & 1 point per dollar spent on all other purchases.
  • Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards. For example, 80,000 points are worth $1,000 toward travel.
  • Get unlimited deliveries with a $0 delivery fee and reduced service fees on orders over $12 for a minimum of one year on qualifying food purchases with DashPass, DoorDash's subscription service. Activate by 12/31/21.
  • Earn 5X points on Lyft rides through March 2022. That’s 3X points in addition to the 2X points you already earn on travel.
Intro APR on Purchases
N/A
Regular APR
15.99%-22.99% Variable
Annual Fee
$95
Balance Transfer Fee
Either $5 or 5% of the amount of each transfer, whichever is greater.
Recommended Credit
Excellent/Good

Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.