SkyWest, Inc. (NASDAQ: SKYW) ("SkyWest") today announced that its wholly-owned subsidiary SkyWest Airlines has entered into a Payroll Support Program 3 Agreement with the U.S. Treasury Department to receive a total of approximately $250 million under the American Rescue Plan Act of 2021. SkyWest received half of the $250 million on April 23, 2021 and expects to receive the remaining funding during the second quarter of 2021. In consideration for the funding, approximately $45 million will be in the form of a ten-year, low interest unsecured term loan, and SkyWest will issue to the U.S. Treasury Department ("Treasury") warrants to purchase approximately 78,317 shares of SkyWest common stock at a strike price of $57.47.
The funds received under this Payroll Support Program will be used to pay for the wages, salaries and benefits of thousands of SkyWest Airlines employees. This Program includes certain restrictions similar to the first two Payroll Support Programs, including limitations on involuntary terminations and furloughs through September 30, 2021, restrictions on the payment of dividends and the repurchase of shares through September 30, 2022, and certain limitations on executive compensation through April 1, 2023.
Additionally, SkyWest also announced it received an additional $35 million payroll support funding on April 23, 2021from Treasury under the Payroll Support Program Extension agreement ("PSP 2"). In consideration for the additional funding under PSP 2, approximately $10 million will be in the form of a ten-year low interest unsecured term loan, and SkyWest will issue to Treasury warrants to purchase approximately 25,958 shares of SkyWest common stock at a strike price of $40.41.