Coronavirus: The $50 billion US airline bailout, unpacked
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.
Airlines are getting a $50 billion chunk of the $2 trillion bailout bill passed in late March to help the U.S. economy withstand the impact of the COVID-19 pandemic. That sum includes $25 billion in loans and loan guarantees from the federal government, and another 25 billion in grants.
For the latest travel news, deals and points and miles tips: please subscribe to The Points Guy daily email newsletter.
It’s meant to be a lifeline to keep airlines — and not just airlines, but a lot of the aviation industry — afloat during the crisis. One thing it is not: free money with no strings attached.
In this video, TPG Senior News Editor Clint Henderson explains the conditions airlines have to meet to get the money. For example, there can be no buybacks of shares until one year after loans are repaid. Airlines must also maintain a level of service between cities; the government has a preeminent interest in keeping the country connected, and the CARES Act is partly intended to do just that.
Labor is also a big part of the aid package. Airlines can use government grants to pay their salaries, since their revenue has dipped to almost zero. They must however guarantee that they will keep people employed, paid and with benefits until September 30.
To deal with the drop in revenue while still having to cover fixed costs like airplane leases, airlines are also parking some of their older planes — the ones that consume more fuel and emit more pollutants. That’s why, as a consequence of the crisis, they will end up with smaller and greener fleets than before the coronavirus hit.
Watch our video for an easy-to-understand breakdown of this very complex piece of legislation:
Featured image by Alberto Riva/The Points Guy
Welcome to The Points Guy!
Earn 50,000 bonus miles and 5,000 Medallion® Qualification Miles (MQMs) after you spend $2,000 in purchases on your new card in your first three months of card membership. Plus, earn up to $100 back in statement credits for eligible purchases at U.S. restaurants with your card within the first 3 months of membership.
With Status Boost™, earn 10,000 Medallion Qualification Miles (MQMs) after you spend $25,000 in purchases on your Card in a calendar year, up to two times per year getting you closer to Medallion Status. Earn 3X Miles on Delta purchases and purchases made directly with hotels, 2X Miles at restaurants and at U.S. supermarkets and earn 1X Mile on all other eligible purchases. Terms Apply.
- Earn 50,000 bonus miles and 5,000 Medallion® Qualification Miles (MQMs) after you spend $2,000 in purchases on your new Card in your first 3 months.
- Plus, earn up to $100 back in statement credits for eligible purchases at US restaurants with your card within the first 3 months of membership.
- Accelerate your path to Medallion Status, with Status Boost®. Plus, in 2021 you can earn even more bonus Medallion® Qualification Miles (MQMs) to help you reach Medallion Status.
- Earn 3X Miles on Delta purchases and purchases made directly with hotels.
- Earn 2X Miles at restaurants worldwide, including takeout and delivery and at U.S. supermarkets.
- Earn 1X Miles on all other eligible purchases.
- Receive a Domestic Main Cabin round-trip companion certificate each year upon renewal of your Card. *Payment of the government imposed taxes and fees of no more than $75 for roundtrip domestic flights (for itineraries with up to four flight segments) is required. Baggage charges and other restrictions apply. See terms and conditions for details.
- Enjoy your first checked bag free on Delta flights.
- Fee Credit for Global Entry or TSA Pre✓®.
- Enjoy an exclusive rate of $39 per person per visit to enter the Delta Sky Club® for you and up to two guests when traveling on a Delta flight.
- No Foreign Transaction Fees.
- $250 Annual Fee.
- Terms Apply.
- See Rates & Fees