The Department of Treasury is acting with uncharacteristic swiftness in the wake of the passage of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). On March 30, 2019, the Department released its preliminary guidance on how eligible aviation businesses can receive loans pursuant to Subpart A of the Act, and how air carriers can obtain payroll relief pursuant to Subpart B of the Act. As part of the guidance, Treasury advised air carriers wanting payroll support under Subpart B to act as quickly as possible to avoid getting caught up in a processing backlog. Specifically, the Department of Treasury indicated that any requests for payroll support received after April 3 may be subject to “processing delays,” and that any requests submitted after April 27, 2020 may be denied.
The CARES Act sets aside $32 Billion specifically to support the aviation industry. Of those funds, $25 billion is earmarked for passenger carriers and $4 billion for cargo carriers. Aviation contractors are eligible for an additional $3 billion.
Of course, there are limitations on how the money can be used, and air carriers have to agree to certain conditions. The payroll support money under Subpart B can only be used for wages and salaries, the carrier cannot furlough employees until after September 30th, and the carrier cannot buy back any of its stock or pay dividends during that period.
The application and the supporting documents currently have to be submitted by email, although the Treasury Department indicates that it will have a web portal set up shortly. The Department indicates that after submission, there will be an unspecified review process, followed by an award of money, which will be based on the company’s payroll for the period between April 1, 2019 and September 30, 2019.
For a complete rundown of the CARES Act and is impact on the aviation industry, REGISTER FOR OUR FREE WEBINAR at 2 PM on April 2, 2020, where we will go through the Act and the regulatory guidance in detail and give you a chance to ask questions.