The Coronavirus Stimulus Package now known as the CARES Act comes with caveats and comforts
The Coronavirus Stimulus Package, the $2 trillion relief bundle
known as the CARES Act, now passed by Congress and given a White House signature, airlines, hotels and the American public await what’s next.
If all goes according to plan, the bill that the president signed into law on Friday grants $25 billion in loans and loan guarantees for passenger airlines, $25 billion in grants to pay workers, plus an additional $4 billion for cargo air carriers.
The airline industry mounted a massive lobbying effort in the past few weeks, mostly through Airlines for America. The airline companies jointly went out for $58 billion in aid that would translate into $29 billion in payroll grants, and $29 billion in loans.
The sums did not come without strings.
Airline companies would be prohibited from ordering stock buybacks and share dividends for at least a year after repaying the loans. The package also restricts executive compensation and prohibits airlines from laying off or furloughing employees through September, in the event the crisis for air carriers continues through the summer and beyond. All loans, their terms and any investments or other assistance provided by the government will be required to be publicly disclosed.
"Delta and our 90,000 employees want to thank Congress and the Administration for their bipartisan support as we navigate through the COVID-19 (coronavirus) crisis," Delta
CEO Ed Bastian said in a statement this week. "The aid provided in this government assistance package will go to directly support airline workers who will in turn help reignite the U.S. economy. We are committed to serving our people, our customers and our communities through this difficult period, and look forward to leading the recovery when we are past the crisis."U.S. Travel Association
President and CEO Roger Dow
also responded to the CARES Act by issuing the following statement:
"The Phase 3 relief package passed by Congress this week is a great first step in this process, and comes at a time when the American travel industry is facing catastrophic economic disaster, with almost six million travel-supported jobs expected to be lost in the next five weeks.
"We call upon the Department of the Treasury and the Small Business Administration to expedite the rulemaking process—within 10 days—to get this money out the door into the hands of those who so desperately need it. Businesses across America are being forced to shut their doors to customers and employees alike, and there is no time to wait.
"While the CARES Act represents tremendous progress toward keeping our economy functioning at this challenging and unprecedented moment, it is clear that more will need to be done to protect the livelihoods of American workers. This relief package will help create a bridge for some time, but there are some that this won't help—and the longer it takes to implement, the more jobs will be lost. We stand ready to work with Congress and the administration to ensure that the economy recovers as quickly as possible once the worst of the health crisis is finally past."
The massive relief bill
also contained allocations for the American public and critical agencies and offices to manage the current virus crisis and gain some footing toward a sense of stability as the events of the next month unfold.
• A one-time check of $1,200 to people with incomes of $75,000 per year or lower, plus an additional $500 per child. (The benefit tiers and then disappears past an annual $99,000 income).
• The bill provides a needed extension unemployment insurance plus an expansion of definitions in who can collect.
• A $500 billion loan program will be available for large corporations. These include the airlines as, unpacked above. Hotels will receive $46 billion, and the Federal Reserve will use the remaining $454 billion to build as much as $4 trillion in additional lending.
• $349 billion in loans for small businesses to help cover up to $10 million each in payroll expenses, rent, mortgage payments and utilities.
• Medical teams will benefit from a $27 billion emergency fund to cover vaccines and medical supplies, with $100 billion allocated for hospitals.
Midsize companies with between 500 and 10,000 employees, will be able to borrow at favorable interest rate that will not top 2 percent annually, with a comforting deferment for paying principal or interest for six months. But these companies will be prohibited from “outsourcing or offshoring” jobs during the term of the loan and until two years after it has been repaid.
Businesses with 500 or fewer employees can get loans directly from banks to cover their needs for payroll and operating expenses. The government will help with the balance providing companies do not lay off workers or do rehire those they have had to lay off.
And not all businesses will be eligible for help, according to reports from the New York Times. Some industries in travel, namely cruise lines, were left out of the bill – mostly because they are flagged outside the United States and are manned employees that hail from across the world.
“We didn’t seek or expect a cash bailout, and it doesn’t appear anyway that we would qualify under the terms,” said Roger Frizzell, a spokesman for Carnival Corporation, told the Times. “We have a significant employee presence in the U.S., but a majority of our employees are on ships, not in any location, certainly not based in the U.S.”