Some Airlines Aren't Happy With the Terms of Mnuchin's Aid - Crain's Chicago Business

(Bloomberg) — Treasury Secretary Steven Mnuchin’s insistence that America’s major airlines partially repay taxpayer funds aimed at shoring up the industry has set up a clash between the Trump administration and the carriers.

At least some of the large carriers are unhappy with the terms — specifically, that large airlines repay 30% of any grant within five years — and are seeking to negotiate with the Treasury Department, said a person familiar with the discussions.

The leader of one trade group said the offer violated “both the letter and the spirit of the law” written to provide help for an industry reeling from the coronavirus pandemic, which has seen air travel grind to a halt. Flight attendant groups were also livid. The large carriers are set to receive billions of dollars each in payroll assistance.

But Treasury officials contend this should come as no surprise, and that airlines were warned what to expect when the $2.2 trillion pandemic rescue package was developed with Congress.

“The bipartisan law passed by Republicans and Democrats and signed by President Trump specifically states that the Secretary may receive warrants, options, debt securities, or other financial instruments to provide compensation for American taxpayers,” Brent McIntosh, undersecretary of Treasury’s international affairs unit, said in an interview. He’s playing a leading role in distributing aid to airlines.

Mnuchin’s team is requiring large carriers to repay 30% of the grants through low-interest loans due within five years, Bloomberg News reported Friday. The agency said it has received 230 applications for aid from passenger carriers of all size. It’s working with 12 that would get more — in some cases much more — than $100 million each, and is discussing what sort of terms it will require in return.

The head of the National Air Carrier Association, which represents mid-sized airline and air