American Airlines applying for 12 billion in cash and loans

American Airlines will apply for approximately $12 billion
in airline rescue grants and loans, CEO Doug Parker and president Robert Isom
said in a letter to employees.

“We intend to apply for these funds and are confident that,
along with our relatively high available cash position, they will allow us to
fly through even the worst of potential future scenarios,” the executives said.

Under the Cares Act, U.S. passenger airlines are
to receive up to $25 billion in federal grants and are eligible — along with
large travel agencies and aircraft maintenance businesses — for up to $25
billion in federal loans.

Grants must be used to maintain salaries and staffing levels
through Sept. 30. Airlines that accept them must also continue service to
markets they flew to as of March 1.

On Tuesday, the Department of Transportation clarified how
it will manage that latter requirement. The rule will pertain only to U.S.
destinations. In cases in which airlines serve multiple airports in the same
market, they will be allowed to consolidate to a single airport. Carriers can
also reduce the number of routes offered from any airport as long as at least
one route is operated.

For destinations that a carrier served at least five days a
week as of the last week of February, the carrier will be required to continue
a minimum service level of five days per week. If carriers had been flying
routes less than five days per week, they will be allowed to drop to
once-weekly service. 

The DOT will also allow the airlines that take federal
assistance to request permission to halt service in certain markets. Airlines
will have to explain why cessation is necessary.

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