SkyWest, Inc. (SKYW) ("SkyWest") today announced that its wholly-owned subsidiary SkyWest Airlines has entered into a Payroll Support Program Agreement with the U.S. Treasury Department to receive a total of approximately $438 million under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). Of the $438 million, approximately $337 million will be a direct grant and approximately $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 U.S. 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.
"We appreciate Congress (CACOX) and the Administration for quickly passing legislation to help support our people," said SkyWest Chief Executive Officer Chip Childs. "These funds will cover important payroll expenses as we work together with our people to provide critical air service during this difficult time, and prepare for when demand returns."