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Apr 1, 2020

Greg Walden Comments on Federal Relief Measures for Airlines, Travel Industry

The Coronavirus Aid Relief and Economic Security Act (CARES Act) provides billions to airlines, railroads and public transit operators – just some of the $2 trillion included in the legislation that is meant to help the economy as the COVID-19 pandemic continues.

In a March 26 Law360 article, McGuireWoods Consulting senior advisor and McGuireWoods partner, Greg Walden, discussed the details of the economic relief measures for the airlines and travel industry.

The CARES Act includes $25 billion in loans and loan guarantees for passenger airlines, repair stations and ticket agents. It also includes $29 billion in grants to airlines and airline contractors. The loans come with restrictions – including a ban on executive pay raises and stock buybacks – and allows the federal government to receive warrants, stock options and other financial instruments as a condition of the financial assistance.

“If the airlines can stretch the cash grants, it remains to be seen how attractive the loans and loan guarantees will be to them given all the strings attached,” Walden said. “That’s good that the money going into the grants [for payroll costs] isn’t subject to restrictions because the Treasury may not give a loan or loan guarantee without a warrant or equity interest.”

The travel industry as a whole will be looking to see what will be included in the fourth legislative package to address the coronavirus pandemic. While phase three was aimed at compensating individuals and businesses for a loss of income and revenue, legislation to boost the transportation sector will help stimulate the economy moving forward.

“I don’t know that [any industry] has a more cogent case for being attended to in a phase-four stimulus than travel, that’s something to get the country moving again,” Walden said.