SkyWest Airlines, a wholly owned subsidiary of SkyWest, Inc. (NASDAQ: SKYW) has announced it has entered into a Payroll Support Program Agreement with the US Treasury Department to receive a total of approximately USD 438 million under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), the company said.
Of the USD 438 million, approximately USD 337 million will be a direct grant and approximately USD 101 million will be in the form of a ten-year, low interest unsecured term loan. SkyWest has elected to receive the funds in four disbursements. In consideration for the funding, SkyWest will issue to the US Treasury Department warrants to purchase approximately 357,000 shares of SkyWest common stock.
The funds received under the Payroll Support Program will be used to pay for the wages, salaries and benefits of thousands of SkyWest Airlines employees. The Payroll Support Program includes certain restrictions, including limitations on involuntary terminations and furloughs through September 30, 2020, requirements to maintain certain levels of scheduled service, restrictions on the payment of dividends and the repurchase of shares through September 30, 2021, and certain limitations on executive compensation.
SkyWest, Inc. is the holding company for SkyWest Airlines and SkyWest Leasing, an aircraft leasing company. SkyWest Airlines has a fleet of nearly 500 aircraft connecting passengers to over 250 destinations throughout North America. SkyWest Airlines operates through partnerships with United Airlines, Delta Air Lines, American Airlines and Alaska Airlines carrying more than 43 million passengers in 2019.