Industries including retail, hotels, travel and manufacturing are preparing to take advantage of the loans, grants, tax relief and other assistance offered by the legislation. Lawmakers indicated it may not be the last round of stimulus, with the economy and some industries still needing help.
The bill includes about $500 billion in loans and assistance for larger companies, as well as states and cities. Separately, it offers about $377 billion in aid for small businesses, much of which would be in loans through the Small Business Administration and banks, guaranteed by the federal government.
Here’s a look at how some of the affected industries are viewing the relief package and issues they’re facing:
Airlines to get loans and cash for equity
Airlines posted their first weekly gain since mid-February after winning tens of billions of dollars in government support in the U.S. stimulus package. The industry is bleeding cash as passenger loads fall to a small fraction of their normal level. A Standard & Poor’s
The rescue plan allocates $50 billion in aid for passenger airlines, half in loans and half in cash assistance earmarked exclusively for payroll, benefits, health care and other employee costs. The aid package includes provisions that require airlines to provide the government with equity or other securities in exchange for the money.
The bill would also give Transportation Secretary
In exchange for the grants, airlines must maintain employment levels through through September and are barred from cutting worker pay and benefits. Companies are barred from paying dividends or buying back shares through September 2021, and must cap executive compensation and termination payouts for two years.
“Essentially, the U.S. government is providing funds to motivate airlines to continue air service and not furlough any team members through a period of incredibly low demand for air travel,”
A major goal of the government aid is to avoid job cuts, and airlines are rushing to slash other costs. Executives are taking pay cuts, freezing hiring and offering voluntary unpaid leaves to employees. With so few passengers flying, carriers are dramatically curtailing flight schedules.
“I can assure you we are losing money on every single flight, and big money,” Southwest CEO
Boeing analyzes funding and strings attached
Nothing is off the table for now, as Boeing analyzes the funding options available, said people familiar with the review, who asked not to be identified as the matter is confidential.
Boeing is exploring the terms and conditions that would be attached to the $500 billion in corporate aid to be distributed through the Treasury Department, the people said. The company hasn’t ruled out claiming some of the $17 billion in funding set aside for firms deemed critical for national security, even though it probably would require Boeing to give up an equity stake to the U.S. government.
Boeing’s critics had seized on comments by CEO
Shareholders applauded Calhoun’s comments since giving the U.S. government an ownership slice would potentially dilute the value of stock held by other investors. Some contend that the U.S. taxpayers should share the upside if federal funding helps companies like Boeing regain their footing.
The Chicago-based company, meanwhile, has a cushion of $15 billion to get it through the summer. But it will need help if the travel-industry tumult lasts longer, said
Shuttered restaurants and retailers lobbied hard for help
Restaurants and retail shops are seeing significant revenue losses as states across the country implement shelter-in-place orders, closures of nonessential businesses and encourage social distancing. Trade groups representing those sectors lobbied hard for financial assistance for their industries to be included in the stimulus package.
In the past three weeks, restaurants have lost $25 billion in sales, which led to 3 million jobs being lost, according to
Kennedy said his group is assessing what the bill means for his membership. “This bill goes a long way to allowing us to keep the lights on a little longer, but the future of the industry is going to need continued federal engagement,” he said.
With shops shuttered, retailers are also hurting. “Their businesses have come to a halt and it’s not for any fault of their own,” said
RILA and the National Retail Federation, which also represents smaller shopping establishments, previously called for federal lawmakers to improve retailers’ access to credit since some businesses are struggling to keep their employees, pay their rent or mortgages, and meet other financial obligations.
Travel and hotel groups say stimulus heeded calls for relief
The U.S. Travel Association, which represents transportation, local attraction sites, tourism bureaus and other parts of the industry, hailed the relief package’s loans and grants for small business, tax changes, and money for airports and tourism businesses.
“Our industry stayed together and presented hard facts to make the case for massive and urgent relief, and our political leaders heard us,” the group’s president,
The American Hotel & Lodging Association criticized the cap on small business loans at 250% of monthly payroll, after seeking 400% of monthly operating costs. Association President
Travel restrictions have pummeled the hotel industry, with business trips canceled and vacations on hold as Americans hunker down to stem the spread of the virus. Occupancy rates have dipped to 30% nationally, according to lodging data firm STR, with the numbers even worse in San Francisco, Boston and New York, major cities where the outbreak has hit hard.
Marriott, Hilton and Hyatt, which have seen their shares battered in recent weeks, have furloughed or reduced the schedules of corporate workers.
Casinos dealing with nationwide shutdown
The casino industry sees the bill’s loan guarantee and tax provisions as “essential to help businesses and employees weather and manage the long-term effects of this crisis,” the
The industry lobbied as hard as any for stimulus funding, sending
Nearly all of the casinos in the U.S. are closed to prevent the spread of the virus, most after regulators and other local authorities ordered them shuttered. For some operators, the closures also follow a steep drop in Macau, where casinos are now open but largely walled off due to travel restrictions in China.
MGM said on Friday it was taking steps to improve its financial situation, including cutting jobs and deferring capital spending. MGM, the largest operator on the Las Vegas Strip, said it had $3.9 billion in cash available and expected to be able to meet its financial obligations for the foreseeable future.
The American Gaming Association also lobbied for tribal-owned casinos to be included in the aid package. Native American casinos were much slower to close than those run by non-tribal operators, even in states where closures were ordered, with some citing tribal sovereignty.
Theater industry sees bill as lifeline after going dark
A trade group for the movie theater industry praised federal relief efforts, saying they would provide a vital lifeline to cinemas that have been forced to close to stem the spread of Covid-19.
Small businesses relief program already overwhelmed
The centerpiece of financial relief for small businesses is an unprecedented $350 billion loan program that can convert into grants under certain conditions, including retaining employees.
Small businesses, which employ almost half of the U.S. private workforce, have been hard hit by lockdowns across the country and many need fast assistance to stay afloat while their companies are shuttered. But the system set to distribute the funds is
The government agency that will oversee the program, the
The network of 800 approved lenders expected to divvy up funding have received little guidance so far. It’s unclear, for instance, whether a business owner could apply online or would have to meet with the lender in person.
“It’s going to be a herculean lift to get this funding into the hands of affected businesses,” said
The Small Business Majority, which represents more than 52,000 U.S. firms, said the package doesn’t meet the economic emergency caused by the virus.
“We have deep concerns that small business owners will be left to muddle through a cumbersome, slow process that will not get them the cash they desperately need right now,” said
Banks won relief for community institutions
The biggest relief for the banking sector in the bill was for community banks, whose capital requirements were cut temporarily to give them more room to lend. The biggest banks already have excess capital they can tap to expand lending by $1.6 trillion, which would increase their balance sheets by 16%.
The industry has gotten more important support and relief from the
Manufacturers to have access to loans and loan guarantees
Companies will have access to $850 billion in loans and loan guarantees, according to the
“These resources will help manufacturers weather this difficult period,”
Cruise companies excluded due to offshore status
Cruise shares tumbled at least 15% Friday after the industry was excluded from the bailout package due to off-shore status. In remarks Thursday, Trump said cruise companies -- which get major tax benefits from incorporating in places such as Panama and Liberia -- should change their homes to the U.S. if they want federal loans. Still, he said he would look for other ways to help them.
The trade group
But the cruise sector’s virtual immunity from U.S. income taxes has been the main sticking point.
Scholes said the industry still has other options, including asking governments such as Italy for help -- noting that cruise lines provide jobs by building ships there. But changing registration entirely probably won’t happen, he said.
“The business model as we know it wouldn’t survive if they had to pay U.S. wages and benefits,” Scholes said.
Uber, Airbnb won extended unemployment benefits
The biggest technology companies, such Google’s
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