Airlines, Treasury Reach Tentative Accord to Tap Billions in Aid

U.S. airlines reached preliminary agreements with the Treasury Department to access billions of dollars in aid as the government attempts to shore up one of the industries hardest hit by the coronavirus pandemic.

The deal covers all major carriers,Treasury said in a statement.American Airlines Group Inc. said it would get $5.8 billion in support, whileSouthwest Airlines Co. said it would get $3.2 billion. The money comes from $25 billion in payroll assistance allocated for passenger carriers in the $2.2 trillion stimulus package signed into law March 27.

“We welcome the news that a number of major airlines intend to participate in the Payroll Support Program,” Treasury Secretary Steven Mnuchin said in the statement. The program “will support American workers and help preserve the strategic importance of the airline industry while allowing for appropriate compensation to the taxpayers.”

The aid represents a temporary lifeline for airlines after the outbreak and government travel restrictions erasedall but 5% of daily passenger demand in the U.S. Forced in some cases to pay more in refunds than they were taking in from new ticket sales and fees, carriers have cut capacity as much as 80% and parked thousands of planes in the industry’s worst-ever disruption. The Treasury expects to start doling out the funds as soon as this week, according to a person familiar with the matter.

Airlines that agreed to participate also includedAlaska Air Group Inc.,Delta Air Lines Inc.,JetBlue Airways Corp,United Airlines Holdings Inc.,Allegiant Airlines,Frontier Airlines, Hawaiian Airlines andSkyWest, according to the Treasury.

Shares of American, United, Delta and Southwest all rose on the news in extended trading.

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