American, Delta and others apply for relief grants — now comes the hard part

Executives have said in public statements and to CNBC that getting the payroll grants are a priority. 

“We still don’t know the severity of the situation. We don’t know how long it will last,” Southwest Airlines CEO Gary Kelly told employees in a video message on Thursday. “[The grants] helps us commit to job security for the next six months and as always, that is my No. 1 priority.”

But the approach of attaching warrants to the grants, not just the loans, was criticized by some industry members, labor unions and lawmakers.

The labor unions representing some 94,000 flight attendants, including those at American, United, Spirit and Southwest, meantime, have warned Mnuchin that if the government exercises the full extent of its warrant on grants, which collectively could equal a 40% stake in the airlines, and could cost them their jobs.

“This effectively renders the payroll grants a poison pill that will cost us our jobs and push us onto taxpayer-funded unemployment insurance — the opposite of what this bipartisan agreement intended,” the unions said.

The Regional Airline Association told Mnuchin and Transportation Secretary Elaine Chao on Monday that for smaller, regional airlines, any equity instrument could force worker furloughs.

“Since most regional airlines do not have the ability to take on debt, access capital markets, or issue warrants or equity, any condition to do so would render these carriers unable to obtain assistance and force these carriers to immediately furlough tens of thousands of aviation employees,” the industry group wrote.

Article source: https://www.cnbc.com/2020/04/03/coronavirus-stimulus-us-airlines-must-apply-soon-for-grants.html