i “think” it’s for the period covered by the cares act. But we all know government policies are very clearly written

 

Other than the previously mentioned turkey vouchers, how does ExpressJet secure financing without collateral? They may have employees and a payroll, but they can’t issue stock warrants, and they don’t own the airplanes, gates, ground equipment, etc. If the government requires other airlines to put up stock warrants as collateral, what can a non-publicly traded company with no real assets offer? Where do they get the money to cover payroll? United can’t cover their own and are looking at shrinking the airline, so the money isn’t going to come from them. There is lots of discussion about the size of the payroll, but not other qualifying factors.

 

The reason the size of payroll matters is that under $100 million for the 6 month period, there are no warrant requirements. You have to also take into account cost to the company other than purely hourly wages. Don't forget companies contributions to health care, dental, life insurance, etc. Possibly 401k contributions as well. And it's not just pilot payroll, mechanics, F/A's, headquarters staff, dispatchers, management. $100 million in 6 mos. Isn't a lot.

 

I understand that, but I thought that it was already determined that XJT does has a company payroll over $100 million. That is why I am asking about possible collateral to either qualify for the government cheese, or to secure outside funding.

 

Gotcha, misunderstood! They definitely don't have much to offer the feds, hopefully they can work something out, or we are screwed.

 

https://www.youtube.com/watch?v=nh3lICcIVrE

It makes for an interesting application. A company with a sizable payroll that can’t be covered has a business model where they operate assets owned by another company. United obtained a line of credit using aircraft and parts as collateral, but that would not have been possible without assets. ExpressJet’s business model works in normal times when the money is flowing, but right now they don’t seem to have much more than a list of employees. If an exemption of some form is worked out, you can be sure that those already qualified will demand the same terms.

 

It's simple, United is going to use their airplanes that we fly for them as collateral for their own funding...and leave XJT in the dust if this continues on for any long term duration. They will just get another glorified staffing company to fly the planes. They will drop us just like they did trans states after we become insolvent. XJT is just a drop in the bucket in terms of the whole economy and big picture, especially to receive some excessive amount of cash. The SBA announced today those PPP loans and EDIL loans have already dried up and no longer accepting new applications until more appropriations are made. I've applied for my businesses but may not even get them because funds are basically gone. I personally don't see XJT getting millions of dollars, let alone $100M as a staffing company with no collateral but I could be wrong.

 

CARES act and SBA loans are different stimulus packages. If you had read SH’s Update #9 you would know that XJT has already made an application to USTres for the grant/loan and they were negotiating terms. However the money the company would be receiving would not cover all the company’s payroll needs. Hence the subsequent announcement of the Reduced Flying Lines for May and beyond.


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I hope you are wrong, i wish no company nor pilot have to go though that.
I am wondering about the legality for XJet to be able to negotiate a deal to get money without assets where that is being required by other entities, like OO and YX in the regionals and all the others majors/LLC etc...

 

The CARES act contains both SBA loan provisions and the airline stimulus packages. The question is, will there be a enough money. Probably not. The SBA side is already out of money and it's been about 2 weeks. H.R. 748. Sec 4112 (a)(1):Financial Assistance For Employee Wages, Salaries, And Benefits.—Notwithstanding any other provision of law, to preserve aviation jobs and compensate air carrier industry workers, the Secretary shall provide financial assistance that shall exclusively be used for the continuation of payment of employee wages, salaries, and benefits to—

(1) passenger air carriers, in an aggregate amount up to $25,000,000,000;

United, just one carrier is losing 100 million in revenue every day. Let's see how fast these funds dry up. We all know little old ExpressJet along with all regionals will be last priority. I think it's a pipe dream for people to somehow think they are protected until September just because the act has a date range until September. If they run out of money, all bets are off unless they increase the amount.

Another part of the bill:
SEC. 4114. REQUIRED ASSURANCES.
(a) In General.—To be eligible for financial assistance under this subtitle, an air carrier or contractor shall enter into an agreement with the Secretary, or otherwise certify in such form and manner as the Secretary shall prescribe, that the air carrier or contractor shall—

(1) refrain from conducting involuntary furloughs or reducing pay rates and benefits until September 30, 2020;

(2) through September 30, 2021, ensure that neither the air carrier or contractor nor any affiliate of the air carrier or contractor may, in any transaction, purchase an equity security of the air carrier or contractor or the parent company of the air carrier or contractor that is listed on a national securities exchange;

(3) through September 30, 2021, ensure that the air carrier or contractor shall not pay dividends, or make other capital distributions, with respect to the common stock (or equivalent interest) of the air carrier or contractor; and

(4) meet the requirements of sections 4115 and 4116.