• Airlines will be prohibited from buying back stock or issuing dividends under the bailout package the House plans to propose.
• The bill will provide $US58 billion for the aviation industry, including $US37 billion in worker payroll grants – effectively protecting jobs – and $US21 billion in loans.
• Past stock buybacks have become a contentious tactic as the airline industry, ravaged by the coronavirus outbreak, seeks federal assistance.
• Visit Business Insider’s homepage for more stories.

Airlines receiving financial aid from the federal government will be prohibited from buying back stock or issuing dividends to shareholders under the new bailout package to be in the House of Representatives, Business Insider has learned.

The bill, which the House Majority Leader Nancy Pelosi will introduce to counter the GOP-driven Senate bill, will provide significant relief for airlines, as well as industry employees.

The Senate failed to advance the bill on Sunday night, falling short of the required votes with Democrats opposed, arguing it did not do enough to protect workers, or to regulate companies receiving bailouts.

US airlines, through lobbying organisation Airlines For America, have asked for $US58 billion in aid: $US29 billion in payroll grants, and $US29 billion in loans.

The draft of the House bill which was dated Sunday night, would offer airlines the same amount, but in a different distribution. $US37 billion would be allocated for payroll grants across the industry, and unsecured loans of up to $US21 billion.

Airline employee unions have argued that providing aid to the airlines in the form of payroll grants is the fastest way to provide assistance to workers, since there is already a disbursement mechanism in place.

Another $US3 billion in payroll grants would be provided for airline contractors, which have been similarly pressured as travel has plummeted.

The bill specifically prohibits share repurchases using the money provided by the bailout package. It also forbids “any distribution of funds to shareholders or bondholders, including stock dividends.”

Additionally, airlines receiving aid would be required to accept limits on CEO salaries for 10 years. Compensation cannot be more than “50 times the median compensation earned by all employees of such air carrier in calendar year 2019,” and severance or separation benefits can not exceed “the maximum total compensation received from the air carrier in calendar year 2019.”

Airlines have seen revenue evaporate since the beginning of the coronavirus crisis, as travel demand has plummeted to near zero. Travel bans and border closures, coupled with directives to self-isolate or quarantine, have forced airlines to suspend routes, ground planes, and cut costs wherever possible.

The US airlines have so far avoided layoffs or furloughs, and offered unpaid leave options to employees. On Saturday, airline CEOs, through a letter from industry lobbying organisation Airlines For America, warned that without payroll grants, staff reductions would be inevitable.

In the letter, the airlines said with payroll grants, they would be able to avoid layoffs until at least September 2020, should the crisis continue until then. They also committed to suspend buybacks and dividends for as long as they were receiving or using aid.

United Airlines individually warned employees on Friday that it would begin staff reductions if an aid package was not settled by the end of March.

Linette Lopez contributed reporting.

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