United Airlines said on Wednesday it expects to receive $5 billion in government coronavirus relief to help it through a sharp drop in demand because of the disease.
The money will be in form of $3.5 billion as grants and $1.5 billion as a low-interest loan, it added.
On Tuesday, Chicago-based United along with American, Delta, JetBlue, and others have reached agreements in principle with the U.S. government over the conditions for their share of $25 billion in payroll grants. The aid will require airlines not to furlough or cut the pay rates of their employees through September 30, even as demand falls to its lowest level in decades.
United said it also expects to issue warrants to the U.S. government to purchase around 4.6 million of United’s common stock, a stake that would enable the government to acquire close to 1.9 percent of the airline, based on FactSet data.
The funds will “cover a portion” of the company’s pay and benefits costs until October 1, United spokesman Frank Benenati stated in a release.
“This financial support is critical to our people, who are ensuring air service to communities throughout the country and supporting the shipment of much-needed medical supplies and travel of health care professionals around the globe,” Benenati said.
