Five American airlines agree deal on government loans with U.S. Treasury

©American Airlines

Under a US$25 billion emergency loan program, five American airlines have confirmed they have successfully concluded negotiated loan deals with the U.S. Treasury. Unlike previous financial assistance in the form of payroll assistance which did not have to be repaid, this new financial aid will be in the form of a repayable loan, though the terms have not been disclosed.

While several more U.S. airlines are still in negotiations with the U.S government, American Airlines is due to close on a US$4.75 billion treasury loan in Q3, which is in addition to the payroll loan of US$5.8 billion already received. The four other airlines included in this agreement are Hawaiian Airlines, Spirit Airlines, Frontier Airlines and SkyWest Airlines.

American Airlines has also warned employees that in relation to anticipated demand during the fall period, the company was overstaffed. “We currently anticipate having 20 to 30% — or more than 20,000 — more team members on payroll than we need to operate our schedule this fall,” they wrote in an employee memo. “To be clear, this doesn’t mean 20,000 of our team members will be furloughed in October, it simply means we still have work to do to right-size our team for the airline we will operate.”

However, a number of airlines are being ultra-cautious as a result of current spikes in coronavirus cases with several states now reporting their highest-ever daily numbers. From October 1, airlines can start to eliminate jobs of furlough staff, while last week a group of six American aviation unions advised lawmakers that a further US$32 billion would be required to enable hundreds of thousands of workers to remain in employment through to March 2021.

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