WASHINGTON, April 21 ― The US Treasury Department said yesterday it had disbursed US$2.9 billion (RM12.7 billion) in initial payroll assistance to 54 smaller passenger carrier and two major passenger airlines, while it finalised grant agreements with six major airlines.

The Treasury is initially giving major airlines 50 per cent of funds awarded and releasing the rest in a series of payments. In total, Treasury is awarding US passenger airlines US$25 billion in funds earmarked for payroll costs. Major airlines must repay 30 per cent of the funds in low-interest loans and grant Treasury warrants equal to 10 per cent of the loan amount, while airlines receiving US$100 million or less do not need to repay any funds or issue warrants to the government.

Treasury said yesterday it had finalised grant agreements with Allegiant Air, American Airlines Group Inc, Delta Air Lines Inc, Southwest Airlines Co, Spirit Airlines Inc, and United Airlines Holdings Inc.

Air carriers have been devastated by the coronavirus pandemic and seen US travel demand fall by 95 per cent.

Southwest said it would receive half of the US$3.2 billion payroll award immediately and the remainder in installments during May, June and July.

Separately, Treasury said Alaska Airlines, Frontier Airlines, Hawaiian Airlines, JetBlue Airways Corp and SkyWest Airlines had also indicated that they planned to participate. The 12 major airlines represent nearly 95 per cent of US airline capacity.

Airlines receiving funds cannot lay off employees before September 30 or change collective bargaining agreements and must agree to restrictions on buybacks, executive compensation and dividends.

Treasury is now considering separate requests for additional assistance from another US$25 billion loan fund for passenger airlines. United said yesterday it was seeking US$4.5 billion in loans from the program, while American said last week it was applying for a US$4.75 billion loan under that program, and Alaska and Horizon said they were applying for US$1.1 billion in loans.

United said yesterday it expected to cut passenger capacity by 90 per cent in June.

Treasury is still considering how to award US$4 billion in payroll assistance to cargo carriers and US$3 billion to airport contractors like airplane caterers.

Estimated global airline losses from the coronavirus pandemic have climbed to US$314 billion, 25 per cent more than previously forecast, the International Air Transport Association said last week. ― Reuters