Associated Press Treasury Secretary Steven Mnuchin.

Major US airlines and the Treasury Department reached a deal on Tuesday over billions of dollars in coronavirus aid.

The coronavirus bailout package contains two provisions for aid to the airline industry, split into two $US25 billion funds for passenger airlines: payroll grants, essentially aid for airline workers paid through their employers, and loans, which are intended to help inject liquidity into the struggling companies.

Tuesday’s agreement surrounded the payroll grants. The coronavirus rescue package budgeted up to $US25 billion in grants for passenger airlines and $US4 billion for cargo airlines. An additional $US3 billion is set aside for airline contractors.

According to a statement from Treasury Secretary Steven Mnuchin, Alaska Airlines, Allegiant Air, American Airlines, Delta Air Lines, Frontier Airlines, Hawaiian Airlines, JetBlue Airways, United Airlines, SkyWest Airlines, and Southwest Airlines all applied for the grants.

American Airlines, in a press release and a separate memo to employees, said it had received $US5.8 billion in payroll assistance. The amount will be split into a $US4.1 billion grant and a $US1.7 billion loan.

In a memo to all employees, Delta said that it would receive $US5.4 billion, including an unsecured low-interest 10 year $US1.6 billion loan.

United confirmed that it had reached the deal, but did not immediately release details on amounts. In a statement, the airline said it looked “forward to completing the final agreements with the Treasury Dept in the next few days.”

Southwest announced that it would receive about $US3.2 billion in payroll support, including a $US1 billion loan. JetBlue confirmed it would receive $US935.8 million, of which $US250.7 million would be a low interest loan.

The Treasury had previously suggested that airlines would be required to pay back 30% of the grants, effectively making them loans. Labour unions and lawmakers objected to those terms, saying the money was intended for the benefit of workers in the struggling industry, not the airlines themselves, and that the repayment requirement could discourage airlines from applying for the aid.

“Unfortunately, Secretary Mnuchin decided to play games with this aid, rather than deliver it in the way Congress intended in the bipartisan deal,” Sara Nelson, president of the Association of Flight Attendants-CWA union, said in a statement. “Now we must fight to keep aviation intact to protect our industry and ensure our economy lifts off again when the virus is under control.”

“We have seen what happens when investment bankers like Secretary Mnuchin control the outcomes,” Nelson added, “and we will not stand by to watch it play out again.”

The Treasury also said it would take equity in airlines receiving aid. Details were not immediately available, although Delta said it would provide the government with warrants to acquire about 1% of Delta stock at $US24.39 per share over five years.

“Even though this process was neither easy nor perfect, it is critically important that in the end there are agreements in place that put workers and families first by keeping hundreds of thousands of airline employees- from flight crews to baggage handlers- on the payroll during this extremely tumultuous period for the U.S. economy,” Rep. Peter DeFazio (D-OR), chair of the House Committee on Transportation and Infrastructure, said.

“I strongly believe what Congress laid out in this provision of the CARES Act-to put workers first-should be the model for any industry-specific relief going forward,” he added.

Under the terms of the bailout, airlines receiving payroll aid are prohibited from furloughing or laying off workers before September 30. They are also banned from buying back stock or paying dividends to shareholders until September 30, 2021. Executive compensation is also limited.

“We are closer than ever to almost a million airline workers knowing they will receive their paycheck and keep their healthcare and other benefits, at least through September,” Nelson said. “At the same time, we were able to rein in the worst corporate practices by tying this aid to restrictions on stock buybacks, executive compensation and dividends.”

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