Trump administration close to selecting bailout advisers
Boutique Wall St banks will oversee government aid for airline and aerospace industries
The Trump administration is close to selecting several Wall Street boutique investment banks to advise the government on its bailout of the US airline industry, which has been walloped by the coronavirus outbreak.
PJT Partners and Perella Weinberg are among the advisers to be hired by the US Treasury to manage the bailout package for airlines earmarked in the $2tn stimulus deal signed into law by President Donald Trump on Friday, according to people briefed on the matter.
Steven Mnuchin, the US Treasury secretary, plans to give each bank oversight of different parts of the air transport and aerospace industries, which will include commercial operators such as Delta and American Airlines, cargo carriers such as UPS and manufacturers deemed key to national security, including Boeing.
The New York-based banks have been negotiating a plan with the Treasury over the past few days and hope to announce a concrete road map by the end of the week, said a top executive at one of the advisory firms, who requested anonymity.
PJT and the Treasury department declined to comment. PWP did not respond to a request for comment.
The $2tn stimulus package included $500bn in loans for US businesses, including $25bn for passenger airlines, $4bn for cargo carriers and $17bn for those groups critical to “maintaining national security”.
Groups across the aerospace and airline industries have raced to raise cash as the economic toll of the coronavirus pandemic has become clear. Airlines have cancelled tens of thousands of flights as people across the globe heed government calls to stay home to curtail the spread of the virus.
Airlines around the world could lose more than $250bn in revenue in 2020 as air traffic has been brought to a halt by national governments, according to the industry’ body Iata. Moody’s expects a 25-35 per cent fall in global revenues, assuming contagion slows by the end of June.
US airlines, which employ about 750,000 people, stand to axe thousands of workers unless they receive support from the government swiftly, executives at the major commercial carriers warned.
Investors have dumped shares in US airlines as the crisis has persisted, with more than $55bn wiped off the collective market valuations of Delta, American, United, Southwest and JetBlue since the start of February. Credit rating agencies have been handing out downgrades ratcheted up warnings on all of the major carriers.
Boeing, which was already reeling from the grounding of the 737 Max jet, has drawn down the entirety of a $13.8bn loan from several of Wall Street’s largest lenders, while Delta, American and United have also secured new financing.
The Wall Street Journal earlier reported on the hiring of the financial advisers.