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Treasury may increase airline loans to coronavirus as Delta, Southwest give up, releasing funds

A member of the ground crew passes American Airlines aircraft parked at the gate during the outbreak of coronavirus disease (COVID-19) at Ronald Reagan National Airport in Washington, USA, April 5, 2020.

Joshua Roberts Reuters

The finance ministry said on Tuesday that airlines could receive larger federal loans than expected after some carriers gave up, releasing more funds into the program.

Congress in March approved $ 25 billion in federal loans to U.S. passenger airlines to help them overcome the coronavirus pandemic, which keeps air travel demand at about 30 percent of last year̵

7;s levels.

Despite preliminary agreements, Southwest Airlines and Delta Air Lines said they did not plan to seek the loans in the end, thanks to other sources of funding. Delta, for example, said earlier this month that it had managed to increase debt sales, supported by its SkyMiles frequent flight program, to $ 9 billion from the planned $ 6.5 billion.

Airlines have until Wednesday to decide whether to take federal loans.

Seven airlines – Alaska, American, Frontier, JetBlue, Hawaiian, SkyWest and United – plan to take the loans, the Ministry of Finance announced.

Last week, the U.S. said it had provided $ 5.5 billion from the program, more than the $ 4.75 billion it expected to receive. The Fort Worth-based carrier said it expects to have up to $ 7.5 billion, the maximum amount for one carrier.

U.S. passenger airlines also received $ 25 billion in government support for wages, mostly grants. These funds prohibit carriers from cutting jobs until October 1, but in just hours, airlines, mostly US and United, plan to cut more than 30,000 jobs.

Airlines and their unions are pushing Congress for an additional $ 25 billion to keep jobs in the sector until March 31.

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