Southwest Follows American Airlines’ Request for Government Aid

Caribbean News…
03 April 2020 12:09am
Southwest Airlines aircraft

Southwest Airlines said it would apply for federal aid, becoming the second U.S. carrier to confirm it will seek assistance as the new coronavirus batters travel demand, according to a news report posted on The Middletown Press, a California-based newspaper.

The discounter will file an application "to discuss the specific details regarding possible grants" to boost liquidity and provide job security for employees, according to a U.S. regulatory filing Thursday. The carrier joins American Airlines Group Inc., which has said it would apply for as much as $12 billion in aid. Southwest didn't say how much it would seek.

U.S. airlines have slashed flying capacity, parked planes, frozen hiring and taken other steps to cut spending as the virus's spread has cut travel by more than 90%.

Southwest is "in intensive care" and losing money on every flight, Chief Executive Officer Gary Kelly told employees March 30. The Dallas-based airline will cut 40% of its daily flights starting in early May and will evaluate further reductions.

The carrier also tapped $2.3 billion under an amended credit agreement to help fund operations, according to Thursday's filing.

Southwest shares rose 2.4% to $32.80 before the start of regular trading in New York. The stock had tumbled 41% this year through Wednesday.

The relief package includes provisions for grants of $25 billion to passenger carriers designed to limit layoffs, and businesses that accept them must agree to not cut pay or trim staff through September. In exchange, the Treasury Department is authorized to receive stock, options or warrants in those airlines. The deadline to apply for grants is Friday.

Another $25 billion in loans is available to airlines if financing isn't otherwise available. The Treasury is required to take a stake in exchange for such lending. Southwest is still considering whether to apply for a loan, a spokesman said by email.

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