Aviation Groups Ask Treasury for Loan Flexibility

 - August 5, 2020, 11:52 AM

This story is part of AIN's continuing coverage of the impact of the coronavirus on aviation.

Four aviation groups are appealing to the U.S. Treasury Department to provide more flexibility in the eligibility of a direct loan program established for air carriers, saying major segments of the industry are facing challenges accessing the program. Section 4003 of the Coronavirus Aid, Relief, and Economic Security (CARES) Act set aside $25 billion in loans and loan guarantees for air carriers, including Part 135 operators, as well as associated Part 145 repair stations and other support entities.

NBAA, the Regional Airlines Association, Helicopter Association International, and the National Air Transportation Association expressed concerns in a letter to the Treasury Department that most of their members “have not been granted access to the loan program. In contrast, all of the major airlines have received loan term sheets from the Treasury Department.”

The groups added that after devoting significant time and resources to apply for the program, “our members have been told to apply using the Main Street lending program.”

A key issue revolves around loan terms require certain access to liquidity. “With many regional airlines and general aviation commercial operators having limited liquidity and few assets to collateralize, we respectfully request additional flexibility to allow these operators access to the Section 4003 loan program,” the groups asked, suggesting the use of a two-tiered approach including unsecured loans for smaller air carriers up to a limited lending amount, at an appropriate interest rate, and a requirement for a pledge of assets and security for over a lending amount.

“The Treasury Department has been an important partner for the aviation community during the Covid-19 pandemic and we appreciate Secretary [Steven] Mnuchin’s direct efforts to provide relief to our industry,” said NBAA president and CEO Ed Bolen. “However, this pandemic is relentless and its continued impact on aviation puts undue stress on operators providing essential services.”