WASHINGTON/CHICAGO (Reuters) – U.S. Treasury Secretary Steven Mnuchin informed major airline companies on Friday he wants them to repay some of the $25 billion in money grants the U.S. Congress authorized last month to cover payroll costs as airline companies weather an extraordinary crisis due to the coronavirus, 3 market officials briefed on the matter informed Reuters.
FILE IMAGE: A flight attendant waits on the departure of a one-passenger flight between Washington and New Orleans as the spread of coronavirus illness (COVID-19) continues, in Washington, U.S., April 3,2020 Image taken April 3,2020 REUTERS/Carlos Barria/File Picture
The Treasury stated in a declaration Mnuchin will not require traveler air carriers that will receive $100 million in payroll help or less to offer settlement and “funds will be readily available immediately upon approval of their applications.”
Reuters initially reported earlier on Friday that Treasury would not seek warrants from smaller sized local carriers, which had actually urged the government not to require compensation.
Mnuchin spoke to the presidents of significant airlines in separate calls on Friday and told them the department was using 70%of the help in grants that would not need to be paid back, and 30%in low-interest loans for which the airlines would be required to offer warrants, the sources said. The rates of interest would increase in time if airline companies had actually not repaid them, the sources stated.
3 people briefed on the matter stated the warrants, which would give the federal government the right to buy equity at a pre-set price and time, would be equal to 10%of the worth of the loan.
That indicates that every $1 billion in government aid would include $700 million in grants, $300 million in low-i