Airlines, Treasury Department strike deal for $25 billion bailout
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Many U.S. airlines have struck a deal with the federal government for about $25 billion to help meet payrolls and keep people on payrolls — at least until October. Marketplace’s Nova Safo has the details, explaining “ten major airlines have signed on, including United, Delta, American and Southwest.”
The following is an edited transcript of his conversation with “Marketplace Morning Report” host David Brancaccio.
Nova Safo: Spirit Airlines says it’s still in negotiations with the Treasury Department. The money is coming from the $2 trillion CARES Act that Congress passed last month.
David Brancaccio: There are strings attached, right?
Safo: For one thing, 30% of the money is going to have to be paid back. The Treasury Department will also get stock warrants from the airlines.
Industry consultant Richard Aboulafia, vice president of analysis at Teal Group, says “the idea with a stock warrant is that you can convert it to shares at a certain price. And then, of course, immediately sell their shares at the new higher price once the air travel market recovers, which hopefully will be happening in a year or two.”
So the federal government could stand to recoup some of the money it’s spending now.
Brancaccio: I understand not everyone is happy about this deal. Why is that?
Safo: Unions representing flight attendants and pilots both said that while they’re grateful for the aid, they’re concerned about the loans the airlines are taking on. They say forcing airlines into taking on the debt will actually make it harder for them to avoid layoffs later. So they’re concerned about the future prospects of this deal.
COVID-19 Economy FAQs
So what’s up with “Zoom fatigue”?
It’s a real thing. The science backs it up — there’s new research from Stanford University. So why is it that the technology can be so draining? Jeremy Bailenson with Stanford’s Virtual Human Interaction Lab puts it this way: “It’s like being in an elevator where everyone in the elevator stopped and looked right at us for the entire elevator ride at close-up.” Bailenson said turning off self-view and shrinking down the video window can make interactions feel more natural and less emotionally taxing.
How are Americans spending their money these days?
Economists are predicting that pent-up demand for certain goods and services is going to burst out all over as more people get vaccinated. A lot of people had to drastically change their spending in the pandemic because they lost jobs or had their hours cut. But at the same time, most consumers “are still feeling secure or optimistic about their finances,” according to Candace Corlett, president of WSL Strategic Retail, which regularly surveys shoppers. A lot of people enjoy browsing in stores, especially after months of forced online shopping. And another area expecting a post-pandemic boost: travel.
What happened to all of the hazard pay essential workers were getting at the beginning of the pandemic?
Almost a year ago, when the pandemic began, essential workers were hailed as heroes. Back then, many companies gave hazard pay, an extra $2 or so per hour, for coming in to work. That quietly went away for most of them last summer. Without federal action, it’s mostly been up to local governments to create programs and mandates. They’ve helped compensate front-line workers, but they haven’t been perfect. “The solutions are small. They’re piecemeal,” said Molly Kinder at the Brookings Institution’s Metropolitan Policy Program. “You’re seeing these innovative pop-ups because we have failed overall to do something systematically.”
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