$3.3 Billion Payroll Support to Be Given to American Airlines

American Airlines will receive $3.3 billion in payroll support. This is going to be the third round of industry support from the US government under the American Rescue Plan Act. This will prevent the airline from having involuntary furloughs and layoffs until September 30^th.

On April 26^th, American Airlines agreed to the United States Department of Treasury to a third round of financial aid. The $3.3 billion Payroll Support Program will benefit American Airlines and its wholly-owned subsidiaries including Envoy Air, Piedmont Airlines, and PSA Airlines. American Airlines received the first installment of financial aid worth $1.7 billion on April 23.

Payroll Support Program To Help Employees

The Payroll Support Program will cover employees’ wages and benefits. The catch is that there will be no involuntary furlough or cuts on wages and benefits until at least September 30, 2021. There will also be restrictions on share repurchases and dividend payouts. Plus, there are certain restrictions regarding executive compensation.

The first round of financial support made it possible for most airline companies to stay afloat. During the first round, American received $5.8 billion worth of payroll support. The support came with a catch. This gave the Department of Transportation the power to dictate the minimum airline frequencies and city services.

The second round was passed in December last year. The third installment under the second round was only paid on April 23 for a sum of $463 million.

The airline industry experienced the worst of the pandemic. Government support allowed the industry to survive and minimize their losses. Southwest Airlines even made a profit in 2021 thanks to the payroll support. Since more people are now vaccinated in the US, experts believe that industry recovery is on its way. On the other hand, international travel remains low as countries are still struggling with the pandemic. On the bright side, some airlines are now hiring pilots and flight attendants.