Utah’s SkyWest Airlines secures further $250mn payroll boost

SkyWest Airlines (OO, Salt Lake City) has entered into a Payroll Support Program 3 Agreement with the United States Department of the Treasury to receive a further injection of around USD250 million under the American Rescue Plan Act of 2021, its parent company SkyWest announced in a stock exchange filing on April 23. The rescue plan act is the USD1.9 trillion economic stimulus bill which President Joe Biden signed into law on March 11. It includes USD15 billion for airlines and airline contractors for a third extension of the payroll support scheme, which would otherwise have expired at the end of March. SkyWest said it had already received half of the USD250 million on April 23 and expected to obtain the remaining funding during the second quarter of 2021. About USD45 million will come in the form of a ten-year, low-interest unsecured term loan, and SkyWest will issue warrants to the Treasury to purchase 78,317 shares of SkyWest common stock at a fixed strike price of USD57.47 per share. The carrier will use the funds “to pay for the wages, salaries and benefits of thousands of SkyWest Airlines employees,” the filing said. Similarly to the first two programmes, PSP 3 comes with certain conditions, such as avoiding involuntary terminations and furloughs until September 30, 2021, restrictions on dividend payments and the repurchase of shares until September 30, 2022, and limitations on executive pay until April 1, 2023. SkyWest also said it had received an additional USD35 million in payroll support funding on April 23 under the earlier PSP 2, about USD10 million of which will be in the form of a ten-year, low-interest, unsecured term loan, and the company will issue warrants to the Treasury to buy about 25,958 shares of SkyWest common stock at a price of USD40.41. As previously reported, in January, SkyWest secured an additional USD233 million from the federal government under the previous Payroll Support Program extension, including USD40 million in a ten-year low-interest loan.