Southwest Airlines received over $7B in federal pandemic aid prior to cancellation chaos
Southwest Airlines received about $7.2 billion in federal aid, including more than $2 billion in loans
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Southwest Airlines was one of the many airlines that received billions of dollars in federal support early in the COVID-19 pandemic prior to the flight cancellation chaos that has wreaked havoc on its travelers' schedules this holiday season. The travel mayhem has left many travelers stranded around the country, and prompted federal investigations by Congress and the Dept. of Transportation.
The $2 trillion Coronavirus Aid, Recovery, and Economic Support (CARES) Act passed Congress with bipartisan support in March 2020 as the COVID-19 pandemic accelerated around the world. Within that massive bill was a payroll support program to help airlines continue to pay workers as the volume of air travelers plummeted due to pandemic-related restrictions.
The $58 billion payroll support program featured a 50-50 split of forgivable grants and low-interest loans to be repaid over a 10-year period. To receive the aid, airlines had to commit to keeping employees on the payroll, refrain from paying dividends or engaging in stock buybacks for a period of time, and cap the compensation of corporate executives.
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Cancelled Southwest Airlines flights are seen in red on the departures flight schedules at the Southwest terminal at the Los Angeles International Airport on Tuesday. (AP/Damian Dovarganes / AP Newsroom)
Southwest Airlines received the first installment of payroll support in April 2020. This tranche totaled a little more than $3.35 billion and included a loan of $976 million, according to data from the Treasury Department.
Later in 2020, Southwest turned down about $2.8 billion in federal CARES Act aid due to the "onerous" strings attached to the support by lawmakers.
As the pandemic dragged and air travelers remained largely grounded due to COVID-19 restrictions, Congress provided another round of payroll support to airlines. Southwest's second tranche of aid arrived in January 2021 and totaled more than $1.98 billion, including a loan of over $565.9 million.
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A traveler sleeps on a bench near the Southwest Airlines check-in counter at Denver International Airport on Tuesday. (AP/David Zalubowski / AP Newsroom)
The third batch of aid to Southwest came after Democrats passed President Biden's $1.9 trillion American Rescue Plan Act along party lines through the budget reconciliation process in March 2021. This installment was finalized in April 2021 and provided Southwest with a total of $1.85 billion in total funding, which included a loan of $525.8 million.
Between the three tranches of pandemic relief, Southwest received a total of nearly $7.2 billion in federal payroll support aid. That amount included just over $2 billion in loans.
A traveler wades through the field of unclaimed bags at the Southwest Airlines luggage carousels at Denver International Airport on Tuesday. (AP/David Zalubowski / AP Newsroom)
In a statement provided to Fox Business, Southwest Airlines noted: "The Federal funds were issued as part of the Payroll Support Program and were utilized to protect the jobs of more than 60,000 Southwest Employees. As a result, Southwest Airlines was able to proudly maintain our 50-year history of never enacting a furlough — even when travel demand dropped drastically in 2020 due to the effects of the COVID-19 pandemic."
A spokesperson also noted that Southwest was able to use the funds to avoid imposing pay cuts on employees during the pandemic, unlike other airlines.
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Southwest Airlines was not able to immediately provide information on the repayment status of the COVID-19 relief loans it received from the federal government. This article may be updated to include that information when it becomes available.