March 19, 2020 / 2:14 PM / 12 days ago

U.S. airlines double down on request for cash as senate leader touts 'loans'

WASHINGTON (Reuters) - Major U.S. airlines on Thursday doubled down on a request for government cash grants even as Senate Majority Leader Mitch McConnell suggested assistance would be in the form of loans.

FILE PHOTO: Senate Majority Leader Mitch McConnell (R-KY) speaks to members of the news media while walking into his office in Washington, U.S., March 17, 2020. REUTERS/Tom Brenner/File Photo

“The current economic environment is simply not sustainable,” Airlines for America and a group of unions wrote in a joint letter.

The group, representing American Airlines Group (AAL.O), Delta Air Lines Inc (DAL.N), United Airlines (UAL.O) and other airlines, along with a coalition of major aviation unions urged lawmakers to provide airlines a package of unsecured loans, grants and tax relief. “The survival of our industry depends on it,” they wrote.

Airlines have slashed thousands of flights, parking hundreds of airplanes and borrowing money as travel demand has collapsed. They have repeatedly warned that they may cut thousands of employees without significant assistance soon.

Hours earlier, McConnell defended plans for the U.S. Congress to pass aid for airlines, saying it was not a bailout but loans that would be repaid.

“We’re not calling about so-called bailouts for firms that made reckless decisions,” said McConnell, leader of senate majority Republicans. “We’re not talking about a taxpayer-funded cushion for companies that made mistakes. We’re talking about loans which must be repaid.”

The airline group asked Monday for $25 billion in cash grants and $25 billion (21.5 billion pounds) in unsecured loans for passenger airlines and another $8 billion for cargo carriers.

Republican Senator Kevin Cramer noted the airline industry “has asked for half of that to be grants and I think that’s been rejected, at least to this point.”

The Trump administration on Wednesday proposed $50 billion in secured loans for airlines.

Trump said he opposed companies using taxpayer funds for executive bonuses or stock buybacks. “Conditions like that would be OK with me,” Trump said Thursday, but he reiterated: “”We will be helping the airline industry.”

Senate Democratic Leader Chuck Schumer said “the airline industry just spent billions and billions in stock buybacks in the last two years—liquidity that would come in handy at a time like this.”

He added any bailout must have “conditions to make sure the interests of labour are given priority, that corporations can’t buy back stock, reward executives, or lay off workers.”

Earlier, U.S. Treasury Secretary Steven Mnuchin said that equity stakes could be a part of the hundreds of billions of dollars in aid to airlines and larger companies that Trump’s administration is proposing.

The Treasury Department on Wednesday proposed a $1 trillion rescue plan, which included $50 billion in financing aid for airlines and $150 billion for other industries, $300 billion for small and mid-size businesses and $500 billion for payments to individuals.

Reporting by David Lawder and David Shepardson; additonal reporting by Andrea Shalal and Richard Cowan; Editing by Will Dunham, Marguerita Choy and David Gregorio

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