ATLANTA – Atlanta-based Delta Air Lines Inc. will receive $5.4 billion in federal economic stimulus funding to help offset huge losses stemming from the coronavirus pandemic.
The money is part of $25 billion in grants for U.S. passenger airlines, $4 billion for cargo airlines and $3 billion for airline contractors.
With few people flying due to the virus-driven shutdown of the economy, Delta has been forced to cut back its schedule by 80%, consolidate airport facilities and cut pay for officers and director-level employees, Delta CEO Ed Bastian wrote Tuesday in a memo to employees.
“The funding, along with self-help measures we have taken, will prevent furloughs and pay rate reductions through the end of September, despite the 95% drop we’ve seen in passenger traffic,” Bastian wrote.
Under an agreement with the U.S. Treasury Department, the $5.4 billion bailout includes an unsecured low-interest loan of $1.6 billion, and the federal government will buy about 1% of Delta stock at $24.39 per share over five years.
Other airlines sharing in the $25 billion aid package include American Airlines, United Airlines and Southwest Airlines.
The agreement prohibits airlines receiving the federal funds from furloughing or laying off workers through the end of September. Airlines also will be allowed to buy back stock or pay dividends to shareholders until Sept. 30.
The bailout of the airlines coincided with the release of $10 billion from the economic stimulus package Congress passed last month earmarked for U.S. airports. Georgia’s share of the funding – $410.8 million – will go to 97 airports, with by far the largest allocation of $338.5 million headed to Hartsfield-Jackson Atlanta International Airport.