Coronavirus Relief – Pandemic Relief for Aviation Workers
Program Objective
The Payroll Support Program (PSP1), Payroll Support Program Extension (PSP2), and Third Payroll Support Program (PSP3) provided financial assistance to passenger air carriers, cargo air carriers, and certain aviation industry contractors to preserve employment in the aviation sector as a result of the COVID-19 pandemic. The financial assistance payments were required to be used exclusively for the continuation of payment of employee salaries, wages, and benefits. Division A, Title IV, Subtitle B of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, enacted on March 27, 2020, established the PSP1 to provide a total of up to $25 billion, $4 billion, and $3 billion for passenger air carriers, cargo air carriers, and certain contractors, respectively. The PSP2, authorized under Subtitle A of Title IV of Division N of the Consolidated Appropriations Act, 2021 (PSP Extension Law), enacted on December 27, 2020, provided a total of up to $15 billion for passenger air carriers and up to $1 billion for certain contractors. The PSP3, authorized under Title VII, Subtitle C, Section 7301 of the American Rescue Plan Act of 2021 (ARP), enacted on March 11, 2021, provided a total of up to $14 billion for passenger air carriers and up to $1 billion for certain contractors.
Eligibility
Eligible Applicants
- For-Profit Organization
PSP1: Payments may be provided only to applicants that are eligible passenger air carriers, cargo air carriers, and contractors, as those terms are defined in the CARES Act and in the guidelines and application procedures for PSP1. Only an entity (whether in the form of a corporation, limited liability company, sole proprietorship, or otherwise) that is individually eligible for PSP1 may receive financial assistance. Eligible applicants must agree to the terms and conditions set out in the PSP1 Agreement and, if Treasury requires, provide certain financial instruments as appropriate taxpayer compensation for the provision of the financial assistance. PSP2: Payments may be provided only to applicants that are eligible passenger air carriers or contractors, as those terms are defined in the PSP Extension Law and in the guidelines and application procedures for PSP2. Only an entity (whether in the form of a corporation, limited liability company, sole proprietorship, or otherwise) that is individually eligible for PSP2 may receive financial assistance. If an applicant includes more than one affiliated entity in its application, Treasury will review each entity to determine whether it meets the criteria for an eligible passenger air carrier or contractor. Any entity that is not itself an eligible passenger air carrier or contractor should not be included on a PSP2 application. Eligible applicants must agree to the terms and conditions set out in the PSP2 Agreement. Passenger air carriers that receive over $100 million in financial assistance and contractors that receive over $37.5 million in financial assistance must provide certain financial instruments as appropriate taxpayer compensation for the provision of the financial assistance. PSP3: Under the ARP, Treasury has authority to provide financial assistance under PSP3 only to a passenger air carrier or contractor that (1) received assistance under PSP2; (2) provided air transportation or performed eligible contractor functions, as the case may be, as of March 31, 2021; and (3) has not conducted involuntary terminations or furloughs or reduced pay rates or benefits between March 31, 2021, and the date on which the passenger air carrier or contractor makes certain certifications that would be included in its PSP3 Agreement entered into with Treasury. Only an entity (whether in the form of a corporation, limited liability company, sole proprietorship, or otherwise) that is individually eligible for PSP3 may receive financial assistance.
How to Apply
Award Procedure
Not applicable. Treasury does not expect to issue new awards.
Not Applicable. Treasury does not expect to issue new awards.
Program details & compliance
Description
PSP1: direct financial assistance payments to passenger air carriers, cargo air carriers and certain contractors aimed at preserving aviation jobs. The financial assistance payments must be used exclusively for the continuation of payment of employee salaries, wages, and benefits. PSP2: direct financial assistance payments to passenger air carriers and certain contractors aimed at preserving aviation jobs. The financial assistance payments must be used exclusively for the continuation of payment of employee salaries, wages, and benefits. PSP3: direct financial assistance payments to passenger air carriers and certain contractors aimed at preserving aviation jobs. The direct financial assistance payments must be used exclusively for the continuation of payment of the recipient’s employee salaries, wages, and benefits. The CARES Act, the PSP Extension Law, and the ARP authorizes the U.S. Department of the Treasury to receive warrants, promissory notes, and other financial instruments issued by companies, for the provision of financial assistance under PSP1, PSP2, or PSP3. Accordingly, certain recipients provided statutorily required taxpayer protection in the form of a ten-year term promissory note equal to 30 percent of the payroll support provided over $100 million to passenger air carriers, 44 percent of the payroll support provided over $37.5 million to contractors, and for PSP1 only, 56 percent of the payroll support provided over $50 million to cargo air carriers. Certain passenger air carriers and contractors also provided warrants which Treasury may exercise to potentially receive a cash settlement or shares of common stock. Each warrant expires five years after the date it was issued. Unlike PSP1, PSP3 was available only to passenger air carriers and certain contractors. Unlike PSP2, carriers and contractors must have received funding under PSP2 to be eligible for PSP3 financial assistance payments.
Mission Categories
Primary: Air Transportation
Other categories:
Economic Injury and Natural Disaster
Use of Funds
Allowed Uses
Employment/Labor/Management
The recipient must use the financial assistance exclusively for the continuation of payment of wages, salaries, and benefits to the employees of the recipient.
Required Documentation
PSP2 recipients will not be required to apply for PSP3. Instead, Treasury will contact each PSP2 recipient to complete the necessary program documentation to participate in PSP3. Each approved entity must also enter into an agreement with Treasury, which Treasury will provide after an application is approved. The agreement will include terms containing, but not limited to: required assurances and other conditions; certain other conditions and covenants; and provisions for the clawback of payments upon the passenger air carrier’s or contactor’s failure to satisfy certain assurances, conditions, or covenants.
This program is excluded from coverage under 2 CFR 200, Subpart E - Cost Principles.