Shares of U.S. airlines jumped in after-hours trading Tuesday after the companies reached a tentative agreement with the U.S. government to cover payroll expenses through September in a $25 billion bailout deal.
The airline industry has been crushed in recent weeks by the collapse in air travel caused by the COVID-19 pandemic.
Treasury Secretary Stephen Mnuchin said in a statement the agreements "will support American workers and help preserve the strategic importance of the airline industry while allowing for appropriate compensation to the taxpayers."
Alaska Airlines, Allegiant Air, American Airlines, Delta Air Lines, Frontier Airlines, Hawaiian Airlines, JetBlue Airways, United Airlines, SkyWest Airlines, and Southwest Airlines have told the Treasury Dept. they plan to participate, according to the statement.
Under the deal, JetBlue said it will receive 76% of their payroll amounts for the second and third quarters of 2019. The support will be divided between outright grants and low-interest loans. In JetBlue’s case, the company will receive $685.1 million in direct support and $250.7 million in loans which must be repaid beginning in October, according to the statement. The government will be granted warrants for a portion of the loan amounts.
The agreements are subject to final negotiation and execution of final documents, JetBlue said.
Shares of JetBlue rose $1.53, or 17%, to $10.77 in after-hours trading.