Mnuchin flexes muscles on airline coronavirus aid — a taste of what other companies may face

CNBC ^ | 13 Apr 20 | Leslie Josephs and Lauren Hirsch

[SkyPilot]

• The Treasury Department has requested that the largest U.S. airlines pay back 30% of the payroll grants, people familiar with the matter told CNBC.
• Treasury Secretary Steven Mnuchin’s decision to essentially convert some of the grants to loans comes as he wants to make clear that he is not offering ailing industries a bailout as they struggle with the coronavirus pandemic.
• It comes amid the backdrop of the presidential election and memories of bank bailouts during the financial crisis.

The Treasury Department is sending a message to large companies weighing government aid to weather the coronavirus pandemic: No free rides.

Negotiations between airlines and the department over payroll grants have dragged on longer than expected after the Treasury Department requested more information and proposed additional conditions for the aid, a hint of what companies could face as they seek government assistance to blunt the impact of the virus and harsh measures like shelter-in-place orders aimed at slowing its spread.

U.S. passenger airline executives cheered when Congress passed a $2 trillion coronavirus relief package that included $25 billion in airline payroll grants on the condition that they they don’t furlough or cut the pay rates of their employees through Sept. 30, as carriers face the deepest crisis in their history.

But Steven Mnuchin’s Treasury Department has asked the country’s largest airlines to pay back 30% of the grants for which they applied, essentially turning them into low-interest loans, according to people familiar with the matter. The grants would also come with equity warrants for 10% of the value of the loan. Talks continued over the weekend and airlines are closing in on deals, which could be announced early this week, according people familiar with the discussions.

[SkyPilot]

Ping

[SteveH]

keeping one eye on boeing...

[bramps]

Why didn’t anyone ask the very simple question when will physical checks be mailed?

...which he should have stated anyway without being asked.

[MinorityRepublican]

If corporations haven’t accumulated savings necessary to ride out the crisis, it is only fair for them to sell their equity to the federal government.

[dp0622]

You can enter your bank info on a special IRS site but i’m guessing you probably know that and don’t want to.

Just trying to help FRiend

[SkyPilot]

American Airlines Retiring 737s, A330s, And More

[PGR88]

Yeah! The only free-rides are for banks and financial companies!! Everyone knows that.

[dfwgator]

I say if they want to be bailed out, all executives and board members must resign.

[srmanuel]

basically what the Government is doing is taking equity stakes in airlines if they want a bailout...

[SkyPilot]

If corporations haven’t accumulated savings necessary to ride out the crisis, it is only fair for them to sell their equity to the federal government.

They blew it all on stock buybacks.

[SteveH]

great, i could use a rebuilt jet engine for my jeep, lol

[Mr Rogers]

The airlines have had travel cut down by 96%. How is that their fault? And what happens if they go under?

[zeestephen]

This is a really, really bad decision - economically and politically.

Trump shut down the American economy.

Now, Trump is telling the airline industry, their employees, and American voters that he - Trump - has no responsibility for what happens next.

You OWN this issue, Mr. President.

Re-open the country.

Today!

[Balding_Eagle]

I say if they want to be bailed out, all executives and board members must resign.

What did they do to cause this?

[IndispensableDestiny]

And what happens if they go under?

Somebody buys their liquidated fleets and starts a new airline.

[bramps]

You can enter your bank info on a special IRS site

:::::::::::::::::::::::::::::::::::::::::::::::::::::::::::

Thank you. I heard him say that before but not tonite. Makes me wonder if that option is actually going to come to fruition. You’re right that I don’t plan on using it but I also don’t want to hear that they have no definitive date for checks to go out (which means I should put it in my will).

[Enterprise]

I'll try to ask the right questions here, because I am not sure what the money is supposed to do for the airlines.

1. I realize that employees will retire, be furloughed, or be laid off or even terminated. Is the money supposed to be used to mitigate the severance of employees from service?

2. A lot of planes are going to be grounded. Will the money be used to keep those planes service worthy, with qualified mechanics employed to do so?

3. Will the money be used so that airlines don't have to down size corporate headquarters?

4. Will the money be used to keep salaries at high levels for airline executives?

Friends, I am not a hater of airlines and their employees. (I despise the TSA though). What will this money accomplish for an industry which will have bleak prospects for a long time to come back to prosperity and widespread use?

[Jane Long]

They may just decide to file bankruptcy.

If they’re getting the dud deal, here.

[icclearly]

Okay, this hits home. I own a small business (at least for now). I had no choice in this boondoggle where the government tells me and everybody else to stay home. If they are going to take our business and livelihood away with these hair-brain schemes, then by golly, they should pay for this disaster!

The airlines are similar, but they have access to funds that most small businesses do not. Maybe they get a little different treatment. But, Mnuchin is not delivering for any of us. Hello DJT!

The CARES Act has been all smoke and mirrors for the small business person!