MtnPeakCruiser

The most detailed write-up I have found regarding the AIP between the Treasury and airlines.

NYTimes article.

“Treasury officials determined that 70 percent of the grants to airlines would benefit taxpayers through payroll and income tax receipts and by reducing the unemployment insurance payments that the government would have paid to airline workers had they lost their jobs. The remaining 30 percent would not directly benefit taxpayers, and therefore would be repaid as a loan over a period of 10 years, a senior Treasury official said on Tuesday.

The Treasury will also receive stock warrants worth 10 percent of the loan amount that exceeds $100 million.

The official said that the structure of the agreement was a carefully negotiated compromise, as airlines were seeking grants with no repayment and the administration preferred loans. The economic relief legislation also allocated a separate $25 billion specifically for loans to the airlines, but the official said that negotiations with the companies for those funds had not begun.”

So this is how I read this. From previous communications we were told the grant amount we would be receiving was approximately $220 million. So $66 million of that would have to repaid over 10 years on a low interest loan, and because that $66 million falls under the $100 million mark, Frontier doesn’t have to issue warrants for 10% of that loan.

American, for example, is accepting $5.8 billion in grants, $1.74 billion of which will be on a 10-yr loan. They’ll also have to issue stock warrants for up to $174 million near the current market rate (around $11.50/share). So if AA’s stock rebounds to say $25/share (it was around $28 before the crash), the government can exercise the warrants and double their money, but that’s still peanuts in comparison to the money AA is receiving from this grant.

Aero1900

Looks like we are definitely getting the money.

I'm very happy to see that. Even if a portion of the money has to be paid back, once we return to profitability, it should be easy for the company to pay off. And as long as we don't take a pay cut, I don't care if a bit of their profits go to paying back the Fed

Considering that no one knows how long this disaster will play out, I'm happy to see us take the money. Im assuming it's still the 220 Million that was discussed before?

DrJekyll MrHyde

That approximate number of $220 million was based on payroll expenses from April through September of 2019, based on the language from the Stimulus Bill. So the number definitely hasn’t gotten bigger, and I doubt they want to accept less than the maximum amount. As I said, they don’t have to issue any warrants to Uncle Sam, so they just have some low interest loans to accompany the free cash. And I’ve seen the explanation that 70% of this grant money that doesn’t have to be repaid would have been paid anyway by the government through unemployment, ha, yeah sure! We are all lucky we get to ride a couple stops on the gravy train while joe taxpayer is getting a one-time $1200 check.

Chief Brody

The tax payers will be compensated. Don't worry about that.
But if it makes you feel any better I know several people you could donate your paycheck to that aren't so lucky.. If it makes you feel better...??

DrJekyll MrHyde

I don’t believe I made any suggestion that I need to clear my conscience. I’m acknowledging that I (we) caught a break. You may insinuate I feel guilty because your MO on these forums is to attack others and paint yourself as the constant victim. I won’t go in circles with you, because I have better options for my day than to interpret your obscure one-liner catch phrases.

These are hard times for most middle class workers, especially in our industry, and it could have been far worse in the near term. There’s still a chance our company craters, but for now take the win and move on.

NWSteeringArmer

No doubt... I didn’t interpret it as anything other than it was a nice, short term win for us and we’re damn fortunate to get that win

Chief Brody

Nor did I
But I don't think it is a jab at the taxpayer.

BiffleBalls

That's the way I read his post as well. I agree, we are really damn lucky.

Gary et al

Considering the average American, aka tax payer, is only getting ~$1200. There are millions unemployed and unemployment does not compensate these people all that much. Millions more being forced to use sick/PTO/vacation time to cover hours not worked if they want to be paid. I'm not exactly sure how "the taxpayers will be compensated." With what? Another $1200 check? A $10,000 check?

Compared to us, they are really having it rough. We are incredibly fortunate to be able to basically having a long term paid vacation. Enjoy it. Learn some new skills.

MtnPeakCruiser

Well, contrary to everything we’ve read it appears we will receive less grant money than the quoted $220 million, about $15.1 million short. $173.4 million in “direct support which covers 58% of the company’s forecast $300 million payroll through September 30, 2020.” And the remainder is a “$31.5 million low-interest loan, which must be repaid within ten years.”

And what confuses me most is that we are subject to warrants contrary to what has been published, the “loan” portion of this grant was less than $100 million which supposedly meant we were exempt. “Frontier will be required to issue warrants to the U.S. government notionally valued at 10% of the $31.5M loan amount.”

Source: Barry memo on Comply