WASHINGTON (Reuters) - The U.S. Treasury Department said on Monday it had disbursed $2.9 billion in initial payroll assistance to 54 smaller passenger carrier and two major passenger airlines, while it finalized grant agreements with six major airlines.

Slideshow ( 2 images )

The Treasury is initially giving major airlines 50% of funds awarded and releasing the rest in a series of payments. In total, Treasury is awarding U.S. passenger airlines $25 billion in funds earmarked for payroll costs. Major airlines must repay 30% of the funds in low-interest loans and grant Treasury warrants equal to 10% of the loan amount, while airlines receiving $100 million or less do not need to repay any funds or issue warrants to the government.

Treasury said on Monday it had finalized grant agreements with Allegiant Air, American Airlines Group Inc, Delta Air Lines Inc, Southwest Airlines Co, Spirit Airlines Inc, and United Airlines Holdings Inc.

Air carriers have been devastated by the coronavirus pandemic and seen U.S. travel demand fall by 95%.

Southwest said it would receive half of the $3.2 billion payroll award immediately and the remainder in installments during May, June and July.

Separately, Treasury said Alaska Airlines, Frontier Airlines, Hawaiian Airlines, JetBlue Airways Corp and SkyWest Airlines had also indicated that they planned to participate. The 12 major airlines represent nearly 95% of U.S. airline capacity.

Airlines receiving funds cannot lay off employees before Sept. 30 or change collective bargaining agreements and must agree to restrictions on buybacks, executive compensation and dividends.

Treasury is now considering separate requests for additional assistance from another $25 billion loan fund for passenger airlines. United said on Monday it was seeking $4.5 billion in loans from the program, while American said last week it was applying for a $4.75 billion loan under that program, and Alaska and Horizon said they were applying for $1.1 billion in loans.

United said on Monday it expected to cut passenger capacity by 90% in June.

Treasury is still considering how to award $4 billion in payroll assistance to cargo carriers and $3 billion to airport contractors like airplane caterers.

Estimated global airline losses from the coronavirus pandemic have climbed to $314 billion, 25% more than previously forecast, the International Air Transport Association said last week.