(Reuters) - Several major U.S. airlines are preparing to apply this week for a $25 billion U.S. government loan program after winning billions in federal payroll grants, people familiar with the matter said, as the industry braces for a slow recovery from the coronavirus pandemic.

FILE PHOTO: Delta Air Lines passenger planes are seen parked due to flight reductions made to slow the spread of coronavirus disease (COVID-19), at Birmingham-Shuttlesworth International Airport in Birmingham, Alabama, U.S. March 25, 2020. REUTERS/Elijah Nouvelage/File Photo

United Airlines Holdings Inc UAL.O, which unlike other major carriers had not yet disclosed its allotted payroll relief, said on Wednesday it would receive about $3.5 billion in direct grants and about $1.5 billion in a low-interest loan and issue warrants for Treasury to purchase about 4.6 million shares of common stock.

While some airlines had initially planned to tap only the $25 billion in federal payroll grants, there is now a growing realization that the terms of the separate $25 billion loan package may be significantly better than those available in capital markets, the people said.

Treasury agreed in principle on Tuesday to award the payroll assistance to airlines but will not release the funds all at once.

It told airlines to apply by Friday if they want priority consideration for the loan package, according to documents posted on its website, and by April 30 to be ensured consideration. If there is any money left over, late applicants could receive funds at a later date.

Cargo carriers also face the same timetable to apply for a $4 billion pool of funds.

An airline official told Reuters most airlines were expected to apply, partly because they would not be required to draw down the loan before the end of September and because the terms are favorable. Airlines will need to offer collateral like planes, spare parts and routes in exchange for the loans and warrants equal to 10% of the value of the loan.

The expected applicants are in addition to American Airlines Group Inc AAL.O, which confirmed on Tuesday it planned to apply for a $4.75 billion loan ahead of the Friday deadline for priority consideration. Alaska Airlines Inc [ALKAIR.UL] also said it would apply for $1.1 billion in federal loans.

Among other large carriers, Southwest Airlines Co LUV.N will likely apply, while United and Delta Air Lines DAL.N were still considering, the people said.

Spirit Airlines Inc SAVE.N is considering applying for the loans, a spokesman said. The budget carrier said on Tuesday it expected to "agree on terms soon" on the payroll assistance grants.

Airline shares closed mixed on Wednesday, with American ending 2.9% higher and United up 3.1%, while Southwest closed 5.6% lower and Delta was off 0.8%.

Major airlines must repay 30% of the grant funds provided in the form of low-interest loans over 10 years and issue Treasury warrants equal to 10% of the value of the grants.

American, which will issue warrants on the payroll loan for the federal government to purchase 13.7 million shares at the April 9 closing price of $12.51, said on Wednesday that it would also issue warrants linked to the separate $4.75 billion loan for about 38 million shares at the same April 9 price. The warrants do no have any voting rights, it said.

On the loan application due by April 30, airlines must describe any changes they expect to make in employment levels through the end of the year. Under the terms of the payroll aid, airlines must keep their workforce until Sept. 30.

Airlines must refrain from paying dividends or stock buybacks, and set limits on executive compensation until a year after the loans are repaid in full.

“Those are absolutely fair things that we were asked to do and we’re certainly not complaining about them,” American Chief Executive Doug Parker told CNBC on Wednesday.