PLC 4ever
Related Articles
Southwest Airlines will turn down a $ 2.8 billion federal government loan under the CARES Act.
Airline management thinks they have enough
liquidity
in the form of cash and short-term investments, and potential future access to additional financing, to help it weather the COVID-19 crisis, according to a investor update filed with the SEC on Wednesday.
Southwest raised about $ 18.7 billion net in 2020 and currently has about $ 15.2 billion in cash.
The CARES law, which was passed in late March, offered the airline industry $ 58 billion in aid – half in the form of wage bill support subsidies, intended to help airlines continue to operate. pay workers until at least September, and half in the form of low-interest operational loans.
Southwest received $ 3.3 billion in wage assistance, of which it is due to repay $ 990 million.
Although Southwest agreed to the terms of the loans last month, CEO Gary Kelly previously called the terms on the CARES Act loans onerous.
In return for funding the payroll support, airlines, including Southwest, were to agree to avoid holidays until at least October, suspend share buybacks, and issue stock warrants to the government. federal. Similar conditions – including capital requirements – were attached to operational loans.
Despite the airline’s optimism about future funding, it’s clear from this week’s investor update that the overall business environment remains bleak. Although the Southwest saw travel demand start to improve in May and June, a resurgence of COVID-19 cases in the United States led this modest recovery to stall in July. The airline said that although there was a slight improvement in August, mainly in the form of last minute bookings, traffic remains low.
