The Treasury Department has urged airlines to submit their requests to cover payroll grants by the end of this week.
Photo: olivier douliery/Agence France-Presse/Getty ImagesThe Treasury Department plans to hire three Wall Street banks for advice on doling out tens of billions of dollars in aid to the airline industry, which is hemorrhaging cash as a result of the coronavirus pandemic.
The department is expected to tap PJT Partners Inc., Moelis & Co. and Perella Weinberg Partners for help with the airline portion of the $2 trillion stimulus bill, according to people familiar with the matter. Each bank is likely to advise on aid to one of three subsectors: commercial airlines, cargo carriers and firms critical to national security, such as Boeing Co., the people said.
The assignments could be disclosed this week, though the plans could change or be delayed as they are still being finalized.
The stimulus bill, signed into law last week to ease the economic fallout from the pandemic, includes $50 billion for passenger airlines, half of it in outright grants to be used to cover payroll for six months and the rest in loans and guarantees. Lawmakers allocated another $8 billion to air-cargo carriers, $3 billion to airline contractors such as catering companies and $17 billion to companies deemed essential to national security.
The law also authorized the Treasury Department to take a stake in airlines—though the chief executive of at least one company likely to receive aid, Boeing, said if the government’s help came with an equity stake, he didn’t want it.
The airline sector is facing an existential crisis as widespread social-distancing requirements prevent regular business and leisure travel. Passenger airlines have lost billions of dollars worth of market value in recent weeks as they cancel flights and bleed cash. United Airlines Holdings Inc.’s market value, for example, has shrunk from more than $15 billion at the beginning of March to less than $7 billion today.
The Treasury Department has urged passenger and cargo airlines to submit their requests to cover payroll grants by the end of this week. In exchange for the payroll grants, carriers must agree not to furlough, lay off or cut pay for employees until Sept. 30. Assistance also hinges on companies agreeing not to buy back shares or pay dividends, and to limits on executive compensation.
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Such advisory roles are highly coveted, not only for the fees they can yield but also because of the importance of the assignments to the health of the national economy. In a similar move, BlackRock Inc. was hired last week to help the Federal Reserve buy hundreds of billions of dollars of corporate bonds.
Dozens of Wall Street banks and law firms helped the government navigate through the financial crisis. Morgan Stanley advised on the cleanup of Fannie Mae and Freddie Mac, while financier Steven Rattner became the “car czar,” helping the Treasury Department restructure the big U.S. auto makers.
The three firms are known as “boutiques,” meaning they dole out advice, not money, to corporate and other clients. That means they have fewer conflicts than big banks, which have lent billions of dollars to airlines.
Write to Cara Lombardo at cara.lombardo@wsj.com and Liz Hoffman at liz.hoffman@wsj.com
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