Summarizing the Coronavirus Economic Relief Act – Part III
The Coronavirus Aid, Relief, and Economic Security Act provides for $500,000,000,000 in “loans, loan guarantees, and other investments in support of” the air carrier industry.
Of the $500 Billion, “$25,000,000,000 shall be available to make loans and loan guarantees for passenger air carriers, eligible businesses that are certified… and approved to perform inspection, repair, replace, or overhaul services, and ticket agents”; “$4,000,000,000 shall be available to make loans and loan guarantees for cargo air carriers”; “$17,000,000,000 shall be available to make loans and loan guarantees for businesses critical to maintaining national security”; and “$454,000,000,000… shall be available to make loans and loan guarantees to, and other investments in, programs or facilities established by the Board of Governors of the Federal Reserve System for the purpose of providing liquidity to the financial system”.
Loans are made under the conditions that “the duration of the loan or loan guarantee is as short as practicable and in any case not longer than 5 years”; “until the date 12 months after the date the loan or loan guarantee is no longer outstanding, neither the eligible business nor any affiliate of the eligible business may purchase an equity security that is listed on a national securities exchange of the eligible business or any parent company of the eligible business”; “until the date 12 months after the date the loan or loan guarantee is no longer outstanding, the eligible business shall not pay dividends or make other capital distributions with respect to the common stock of the eligible business”; “the recipient intends to restore not less than 90 percent of the workforce of the recipient that existed as of February 1, 2020”; “the recipient will not outsource or offshore jobs for the term of the loan and 2 years after completing repayment of the loan”; and “no officer or employee of the eligible business whose total compensation exceeded $425,000 in calendar year 2019… will receive [a raise]”.
The bill also specifies additional loans to be made to “passenger air carriers, in an aggregate amount up to $25,000,000,000;… cargo air carriers, in the aggregate amount up to $4,000,000,000;… and contractors, in an aggregate amount up to $3,000,000,000”, “to preserve aviation jobs and compensate air carrier industry workers”. The “financial assistance… shall exclusively be used for the continuation of payment of employee wages, salaries, and benefits” of “airline catering services’” employees, meaning those in “preparation, assembly, or both, of food, beverages, provisions and related supplies for delivery, and the delivery of such items, directly to aircraft or to a location on or near airport property”.
(A summary of pages 310-598 of the bill is included in this article. The bill is 880 pages long. Further summaries to follow.)