© 2020 molitrato

Us Treasury Agreement With Airlines

Timothy J. Lynes is responsible for the company`s aeronautical practice. For more than 25 years, he has represented manufacturers, renters, airlines and their insurers in the sale, leasing and financing of aircraft. Much of Tim`s practice includes structuring aircraft purchase contracts, cross-border and tax leasing, loans, Chattel mortgages, residual value assistance and credit contracts, and aviation insurance. In addition, he regularly advises clients on regulatory issues at the Department of Transportation and the Federal Aviation Administration. Since March, airlines have fixed planes and delayed jet delivery in an attempt to limit the fire of money, as the global coronavirus pandemic has effectively paralyzed travel for months. On April 14, the U.S. Treasury Department announced that it had reached an agreement in principle with 10 U.S. airlines1 on the basic terms of their participation in the compensation program under Title IV, subtitle B of the CARES Act.2, which other airlines that have applied for an exemption, such as ExpressJet Airlines, Mesa Airlines, Republic Airways and Spirit Airlines, had not yet reached an agreement.

The sum of the aid granted to each passenger airline will correspond to approximately 76% of the wages, salaries and benefits paid by an airline to its full-time, part-time, fixed-term and lease-based employees in the second quarter of 2019. Under the agreement-in-principle, a direct subsidy will account for 70 per cent of an airline`s total aid and the remaining 30 per cent will be granted in the form of a loan. Loans will be remunerated in the first five years with an interest rate of 1 per cent via LIBOR and 2 per cent via LIBOR over the next five years.4 Loans can be paid in advance at any time before maturity at face value.5 As the U.S. economy gradually reopens, airlines are struggling to induce cautious passengers to return to the skies and international routes have been significantly reduced due to various travel restrictions. The airlines have been in talks with the Ministry of Finance since July. Some conditions apply, such as the maintenance of a number of jobs and salary caps. In a statement, Sara Nelson, president of the Cabin Staff Association, hailed the payment as an “unprecedented benefit” but criticized Mnuchin for delaying aid and demanding that airlines repay some of the funds. As part of an assistance program to help the industry overcome the coronavirus pandemic, the U.S.

Treasury has agreed on the terms for loans to American Airlines Group Inc. and four small airlines. 13 See the United Airlines, Inc., United Airlines press release expects to receive $5.0 billion through the CARES Wage Support Program (April 15, 2020) (available at: hub.united.com/2020-04-15-united-airlines-expects-to-receive-5-0…). The official said the structure of the agreement was a carefully negotiated compromise, as airlines sought subsidies without repayment and the administration preferred loans. Economic relief laws also provided $25 billion separated specifically for airline loans, but the official said negotiations with companies on those funds had not yet begun. The Ministry of Finance is also negotiating with carriers that can benefit from $8 billion in subsidies and loans. They are the first airlines to accept government loans from a $25 billion Congress under the Cares Act, the $2,200 billion stimulus package passed in March. Major airlines also received an additional $25 billion in federal aid to pay workers through the end of September to avoid mass layoffs, which they said would otherwise have been inevitable.