New York (AFP)

The future of American airlines is uncertain: they are engaged in perilous negotiations with the federal government, which is determined to take stakes in their capital in exchange for its financial aid to cover the losses due to the coronavirus.

A showdown is played out behind the scenes between airline officials and the Treasury, responsible for distributing the $ 2.2 trillion of the economic aid plan promulgated in late March by Donald Trump, according to industrial sources.

This plan provides aid of 50 billion to companies, half of which must be used to preserve jobs until September 30.

If the Treasury refuses to speak of rescue or bailout, the ministry nevertheless wants to avoid being accused of signing a blank check.

"There is a passage in the plan which says that the secretary, therefore me, will determine the adequate compensation" for the taxpayer, declared last week Steven Mnuchin, the secretary of the Treasury, during a briefing in the White House .

One of the consideration under discussion is a stake in the capital, the extent of which will say whether it is a nationalization or not. In any case, this assumption is seen as a red line by leaders, according to industry sources. Because they fear that the shareholder state is a foil for the financial markets.

American Airlines, United Airlines, Delta Air Lines and Southwest, the four big American companies, hesitate, explain the same sources, to accept the public aid, in spite of the brutal erosion of their incomes. After a disastrous first quarter, Delta expects sales to fall 90% in the second quarter, while American has cut 90% of its flights to and from New York, a major market.

- Unreasonable -

A sign of reluctance: if American officially filed its request for aid last Friday, the transporter hired the services of banker James Millstein to advise it in negotiations with the Treasury, according to an internal source.

Mr. Millstein is a veteran of debt restructuring. He was also the architect of the rescue plan for banks and financial institutions implemented by the Obama administration from 2009 to 2011.

Southwest only made its official request at the last minute, a spokesman told AFP.

"Our goal is to assess all sources of liquidity that will help protect employees and strengthen the health of our business," he said.

The Treasury asked the companies to indicate how they intended to compensate the federal government and in the process mandated the bankers of PJT Partners to discuss the terms of possible agreements.

Delta, American, United and Southwest are currently in a weak position in these negotiations: their survival is threatened and they have spent $ 39 billion the last five years to pamper their shareholders through share buyback programs, a calculated S&P Dow Jones Indices, rather than guarding against a possible crisis.

These handicaps are likely to encourage the Treasury to tighten its requirements, which would push these companies to prefer to declare bankruptcy, fear the unions and elected Democrats.

American law allows a company to restructure away from its creditors but at the expense of employment.

"Tell Secretary Mnuchin that he cannot play with the lives of people like that," criticizes Delta AFA, the union of Delta seafarers, who launched a petition to force the Treasury to soften its position.

"The intention of Congress in passing the law was to provide direct assistance to airlines (...) by recognizing that bankruptcy was neither in the interest of these companies nor in that of their employees," write, in a letter sent Sunday to Mr. Mnuchin, four high-ranking Democrats, including Nancy Pelosi, the President of the House of Representatives.

This aid, they add in this missive consulted by AFP, "must not be accompanied by unreasonable conditions which would force an employer to choose bankruptcy rather than subsidies in the form of wages to its employees".

© 2020 AFP