Southwest Airways obtained over $7B in federal pandemic assist previous to cancellation chaos
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Southwest Airways was one of many many airways that obtained billions of {dollars} in federal help early within the COVID-19 pandemic previous to the flight cancellation chaos that has wreaked havoc on its vacationers’ schedules this vacation season. The journey mayhem has left many vacationers stranded across the nation, and prompted federal investigations by Congress and the Dept. of Transportation.
The $2 trillion Coronavirus Support, Restoration, and Financial Assist (CARES) Act handed Congress with bipartisan help in March 2020 because the COVID-19 pandemic accelerated world wide. Inside that large invoice was a payroll help program to assist airways proceed to pay staff as the quantity of air vacationers plummeted attributable to pandemic-related restrictions.
The $58 billion payroll help program featured a 50-50 break up of forgivable grants and low-interest loans to be repaid over a 10-year interval. To obtain the help, airways needed to decide to preserving staff on the payroll, chorus from paying dividends or participating in inventory buybacks for a time frame, and cap the compensation of company executives.
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Cancelled Southwest Airways flights are seen in purple on the departures flight schedules on the Southwest terminal on the Los Angeles Worldwide Airport on Tuesday. (AP/Damian Dovarganes / AP Newsroom)
Southwest Airways obtained the primary installment of payroll help in April 2020. This tranche totaled slightly greater than $3.35 billion and included a mortgage of $976 million, in keeping with knowledge from the Treasury Division.
Later in 2020, Southwest turned down about $2.8 billion in federal CARES Act assist because of the “onerous” strings connected to the help by lawmakers.
Because the pandemic dragged and air vacationers remained largely grounded attributable to COVID-19 restrictions, Congress offered one other spherical of payroll help to airways. Southwest’s second tranche of assist arrived in January 2021 and totaled greater than $1.98 billion, together with a mortgage of over $565.9 million.
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A traveler sleeps on a bench close to the Southwest Airways check-in counter at Denver Worldwide Airport on Tuesday. (AP/David Zalubowski / AP Newsroom)
The third batch of assist to Southwest got here after Democrats handed President Biden’s $1.9 trillion American Rescue Plan Act alongside get together traces by means of the price range reconciliation course of in March 2021. This installment was finalized in April 2021 and offered Southwest with a complete of $1.85 billion in complete funding, which included a mortgage of $525.8 million.
Between the three tranches of pandemic aid, Southwest obtained a complete of almost $7.2 billion in federal payroll help assist. That quantity included simply over $2 billion in loans.
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A traveler wades by means of the sector of unclaimed baggage on the Southwest Airways baggage carousels at Denver Worldwide Airport on Tuesday. (AP/David Zalubowski / AP Newsroom)
In a press release offered to Fox Enterprise, Southwest Airways famous: “The Federal funds had been issued as a part of the Payroll Assist Program and had been utilized to guard the roles of greater than 60,000 Southwest Workers. In consequence, Southwest Airways was capable of proudly preserve our 50-year historical past of by no means enacting a furlough — even when journey demand dropped drastically in 2020 because of the results of the COVID-19 pandemic.”
A spokesperson additionally famous that Southwest was in a position to make use of the funds to keep away from imposing pay cuts on staff in the course of the pandemic, not like different airways.
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Southwest Airways was not capable of instantly present data on the compensation standing of the COVID-19 aid loans it obtained from the federal authorities. This text could also be up to date to incorporate that data when it turns into out there.
