WASHINGTON—The Trump Administration wants to send airlines $50 billion worth of secured loans, a far cry from the package of grants, unsecured loans and tax relief sought by Airlines for America (A4A) to blunt the impact of the COVID-19 pandemic.

In a Mar. 18 memo, the U.S. Treasury Department proposed sending $50 billion to the Exchange Stabilization Fund for secured lending to American passenger and cargo airlines.

The Treasury said it would decide the type of collateral, as well as an appropriate interest rate and other terms and conditions, at a later date. Under the proposal, borrowers would have to agree to specified continuation of service requirements and limits on executive pay increases until the loans have been fully repaid. 

The administration’s bailout plan marks a reversal by President Donald Trump, after he appeared to endorse A4A’s more extensive request in remarks to reporters earlier this week. The airline lobbying arm had asked for $29 billion in immediate grants, another $29 billion in unsecured, zero-interest loans or loan guarantees and excise tax relief through the end of 2021. 

“U.S. airlines are doing everything in their power to protect and preserve the jobs of our 750,000 hard-working employees,” A4A spokesman Carter Yang said in a statement. “This crisis has caused devastating economic harm to a previously robust, healthy industry, and we are grateful to the President, Vice President, [Treasury Secretary Steven] Mnuchin and [Transportation Secretary Elaine] Chao for their support.”

The White House plan was included as part of its “Stage Three” coronavirus stimulus proposal, which also includes direct payments to taxpayers, loans to small businesses and targeted funds for other distressed sectors of the U.S. economy. 

Cowen & Co. analyst Helane Becker said the airlines mainly need the aid money for labor costs, noting that U.S. carriers have so far avoided mentioning furloughs or layoffs through the crisis to date. She advised that airlines consider temporarily shutting down altogether and laying off employees en masse until demand returns.

“Given the complete lack of current demand, we believe the airlines should probably shut down their operations, park all of their aircraft and lay off every one of their employees until such time as demand returns,” Becker said. “Obviously, that’s a draconian measure, but it would conserve cash, and that’s what they need to do now.”