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U.S. Treasury chief to brief Trump on aviation aid review

imageStock Markets11 hours ago (Apr 09, 2020 11:55AM ET)

(C) Reuters. FILE PHOTO: Treasury Secretary Steve Mnuchin takes a phone call in the hall outside a meeting to wrap up work on coronavirus economic aid legislation

By David Shepardson and Tracy Rucinski

WASHINGTON/CHICAGO (Reuters) – U.S. Treasury Secretary Steve Mnuchin said he plans to brief President Donald Trump on the status of government’s review of requests for $32 billion in grants from passenger airlines, cargo carriers and airport contractors.

“We hope to get to a lot of the airlines starting tomorrow and over the weekend with preliminary information. And it is our objective to make sure, as I’ve said, this is not a bailout, but that airlines have the liquidity to keep their workers in place. So that’s the next big thing we’ll be rolling out,” Mnuchin said in an interview with CNBC.

Passenger airlines are eligible for $25 billion in cash grants for payroll, while cargo carriers can get $4 billion in cash grant and airport contractors like caterers and airplane cleaners are eligible for $3 billion in grants.

Mnuchin has repeatedly said the government will receive compensation for the grants, but airline unions and some Democrats have urged him not to demand equity or warrants.

The talks have been ongoing and Treasury asked airlines seeking government payroll support to provide additional detailed information on capital structure, liquidity and loyalty programs, people briefed on the matter told Reuters Wednesday.

As Treasury reviews applications for government aid, it has asked for details such as airlines’ daily cash burn rates, when they expect to run out of cash and their best estimates for projected wages and benefits between April 1 and Sept. 30, they said.

Treasury has also requested information on the value and historical cash flow of airlines’ loyalty programs, as well as an overview of all unencumbered assets such as aircraft, engines and spare parts.

Airlines continue to slash flights as travel demand dwindles to less than 5% of normal levels. On Wednesday, the number of people screened at U.S. airports fell to a new low of 94,931, down from a normal 2.23 million.

JetBlue Airways Corp (O:JBLU) on Wednesday asked the U.S. Transportation Department for emergency approval to temporarily suspend service to 11 U.S. airports, including Dallas, Houston and Minneapolis. It also announced was consolidating flights in five U.S. metropolitan areas and suspending flights at Baltimore, Providence, New York LaGuardia and San Jose airports.

Spirit Airlines (N:SAVE) also asked approval to halt flights to two dozen airports, saying requiring flights “will rapidly exhaust Spirit’s financial resources and manpower, while adding virtually nothing to those cities access to air transportation.”

U.S. Treasury chief to brief Trump on aviation aid review

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