Utah’s SkyWest Airlines secures extra $233mn payroll support

SkyWest Airlines (OO, Salt Lake City) has secured an additional USD233 million from the US federal government under the Payroll Support Program’s extension, including approximately USD40 million in a ten-year low-interest unsecured loan. The regional capacity provider said it had already received half of the total amount with the second tranche expected in February 2021. In return for the support, the airline will not be allowed to involuntarily lay-off or furlough staff through March 31, 2021. It has also accepted restrictions on the payment of dividends and the repurchase of shares through March 31, 2022, and certain limitations on executive compensation through October 1, 2022. SkyWest will also issue to the US Treasury Department warrants to purchase approximately 98,815 shares of SkyWest common stock at a strike price of USD40.41. If converted, the government’s stake in the carrier would be in the range of 0.2%. Employees laid-off or furloughed after September 30, 2020, when the original Payroll Support Program expired, will be recalled with salaries retroactively due from December 1, 2020. They will be included in the ban on terminations through the end of March 2021. The US administration enacted the extension of the Payroll Support Program on December 27, 2020. SkyWest also said that it has agreed with the US government to extend the deadline for borrowing under the USD725 million facility from March 26 to May 28, 2021.