a boost for united

United Airlines announces major boost thanks to government bailout

United Airlines announces major boost thanks to government bailout

United Airlines flight attendant stewardess cabin customer
The bailout will ensure Houston employees of United will continue to receive paychecks.  Photo courtesy of United Airlines

As the COVID-19 pandemic continues to grip America and wreak havoc on commerce, some industries are receiving government assistance. On April 15, two Texas airlines, Southwest Airlines (Dallas) and American Airlines Group Inc. (Fort Worth) announced billion-dollar bailouts from the U.S. government. Southwest will receive more than $3.2 billion; American Airlines will receive $5.8 billion, as CultureMap reported.

Following suit, United Airlines, which boasts a major hub in Houston, has announced it will receive approximately $5 billion in relief. The funds will come from the Payroll Support Program under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

As for the breakdown, approximately $3.5 billion will be a direct grant and approximately $1.5 billion will be a low interest rate loan, according to United.. These funds secured from the U.S. Treasury Department will be used to pay for the salaries and benefits of tens of thousands of United Airlines employees, many of whom reside in Houston.

Meanwhile, the airline's parent company also expects to issue warrants to purchase approximately 4.6 million shares of UAL common stock to the federal government, per a press release.

“These funds will cover a portion of our pay and benefits costs through September 30, and we are thankful for the support provided to our employees and their families by the CARES Act,” said United Airlines spokesperson Frank Benenati, in a statement. “This financial support is critical to our people, who are ensuring air service to communities throughout the country and supporting the shipment of much-needed medical supplies and travel of health care professionals around the globe.”

Other airlines receiving aid include Alaska Airlines, Allegiant Air, Delta Air Lines, Frontier Airlines, Hawaiian Airlines, JetBlue Airways, and SkyWest Airline.

The move comes at a critical time for the industry. According to the New York Times, U.S. airlines had idled 2,200 aircraft and that passenger volume was down 95 percent from a year ago. Global passenger revenues are expected to fall by $314 billion this year, a 55 percent decline from last year, the International Air Transport Association.