NUMEROUS AIRLINES RECEIVE PAYROLL ASSISTANCE UNDER SECTION 4113 OF THE CARES ACT
April 28, 2020
On April 14, 2020, Secretary Mnuchin of the Treasury Department announced that Allegiant Air, American Airlines, Delta Air Lines, Southwest Airlines, Spirit Airlines, and United Airlines Alaska Airlines, Frontier Airlines, Hawaiian Airlines, JetBlue Airways, and SkyWest Airlines. had all agreed to participate in the Payroll Support Program under Section 4113 of the CARES Act. Together, these airlines represent nearly 95 percent of U.S. airline capacity. While Treasury has not yet provided specific details about any of the agreements, a number of airlines have confirmed the amount of aid they expect to receive in separate interviews, such as:
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Delta Air Lines – $5.4 billion, which includes a $1.6 billion loan;
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Southwest Airlines – $3.2 billion, which includes a $1 billion loan;
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American Airlines – $5.8 billion, which includes a $1.7 billion loan;
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JetBlue Airways – $935.8 million, which includes a $250.7 million loan; and
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United Airlines – $5 billion, which includes a $1.5 billion loan.
Many of these airlines may also be applying for, and receiving, direct loans under Section 4003 of the CARES Act. For instance, as part of its agreement with the Treasury Department, American indicated it received an initial loan of $1.7 billion, but that it also intends to seek a separate loan of $4.75 billion.
Importantly, Alaska, Hawaiian, JetBlue, American, Cape Air, Sun Country Airlines, SkyWest, Frontier, United, Delta, Allegiant, Silver Airways, Mokulele Airlines, and Spirit have all applied for waivers of the DOT minimum service requirements since the final rule was issued on April 7. These minimum service requirements are applicable to any passenger airlines seeking aid under the CARES Act aviation programs. In the final rule, DOT asserted that such exemptions would be processed on a priority basis.
DOT has already responded to the requests of JetBlue, Spirit, Hawaiian, Alaskan, and Delta. JetBlue’s exemption was partially granted with regard to airports for which the Governor of Puerto Rico had requested flight restrictions, the other service exemption requests were denied. Regarding Spirit’s request, DOT partially granted the exemption to address airports that Spirit had not previously serviced, and denied all other requests. DOT partially granted Hawaiian’s request, in that instead of completely eliminating an obligation to one airport (what airport?), DOT is allowing Hawaiian to increase its service to another airport (what airport?) instead. DOT Partially granted Alaska’s request with regard to certain flights to Hawaii due to the extreme distance involved and the 14-day quarantine currently in effect in Hawaii for all visitors. Finally, DOT partially granted Delta’s request to begin its seasonal summer service in May or June 2020.
Based on the responses so far, it appears DOT will be taking a hard stance on exemption requests. We will continue to follow DOT’s determinations on these exemptions and provide further updates as they become available.
If you have any questions, please contact Evelyn Sahr (esahr@eckertseamans.com or 202-659-6622); Drew Derco (dderco@eckertseamans.com or 202-659-6665), or Andy Orr (aorr@eckertsemans.com or 202-659-6625).
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