As the dust settles on the first wave of $2.7 billion federal COVID-19 relief funds handed out for Hawaii businesses, the biggest single recipient was the state’s largest private employer, Hawaiian Airlines.
The company secured approximately $654 million split between two types of aviation industry aid, the company’s chief executive, Peter Ingram, told fellow members of a state House committee dealing with COVID-19 earlier this week.
The money is part of the $2.2 trillion Coronavirus Aid, Relief, and Economic Security Act, also called the CARES Act.
“It is not a long-term fix, but it does help to buy us some time so that, as we get past the immediate crisis, we’re in a position to resume our business and have a team in place to do so,” Ingram said.
It shows just how deeply COVID-19 has hurt the travel industry when an airline executive says nearly two-thirds of a billion dollars is merely enough to tide the company over for a while.
Meanwhile, its fleet is virtually grounded, along with an army of flight attendants and pilots that are part of some 7,500 workers overall.
Small Firms Have Gotten Relief, Too
Hawaiian Airlines is far from the only local company that’s suffering – and getting help.
According to the U.S. Small Business Administration, 11,553 Hawaii companies divided up $2.05 billion in funds for businesses with 500 or fewer employees, which was awarded under the first phase of the SBA’s Paycheck Protection Program. Although technically loans, the funds don’t have to be paid back if at least 75% is used for payroll and the rest for expenses such as rent and utilities.
That money ran out last week, just a week after the program went live, leaving many businesses with no relief at a time when most are shuttered by government orders.
On Thursday, the U.S. House voted to pump another $310 billion into the small business program, meaning many of those whose applications were denied will likely get loans after all.
It’s not clear what local companies have gotten money, since the SBA has not made that information public. Neither have the private financial institutions that processed the loans, which are backed by the SBA.
On the national level, there was considerable publicity about large chains and publicly traded companies getting big chunks of money by exercising loopholes in the law, which was quickly passed to stave off hardship for firms and employees.
The negative publicity, along with anecdotes about mom-and-pop shops getting short shrift, has led some to think only big companies have gotten relief.
But that’s not true, said Maura Fujihira, the owner of Fishcake, a furniture store and gallery in Kakaako.
Fujihira is part of The Village Hui, a group of 46 small businesses in Howard Hughes Corp.’s Ward Village that have banded together to help each other navigate the crisis.
Of the 46 members, at least 24 applied for PPP loans during the first phase, and eight got loans. Fujihira was among those left out, but her bank said she’s in the queue for the next round of loans. Fujihira declined to say which hui members got loans, but said the group was pleased some members have gotten help.
“Some people got it, and everybody’s happy about that,” she said. “It’s better than nothing.”
According to the SBA, nationally 75% of loans granted were for $150,000 or less, while 4% were for over $1 million.
And Ingram provided a fair amount of detail about how much Hawaiian Airlines is getting and how the money would be spent. The money will be disbursed to the company over time, not all at once.
Hawaiian’s relief includes $290 million to be used to pay employees under the CARES Act’s $25 billion Payroll Support Program for airlines, Ingram said.
That $290 million is huge for Hawaii, but small in the scheme of things.
According to Aviation Week, the four largest carriers will split almost $20 billion, including $5.8 billion for American Airlines, $5.4 billion for Delta, $5 billion for United and $3.1 billion for Southwest. Another $992 million will go to Alaska Airlines, $936 million to JetBlue, $334 million to Spirit and $172 million to Allegiant, the publication said.
Still, Ingram said, Hawaiian’s share is enough to cover about 75% of what it spent on payroll from April through September in 2019.
And this year’s payroll costs will be mitigated because about half of the carrier’s employees have signed up for voluntary furloughs or leaves of various lengths, spokeswoman Ann Botticelli said in a written statement.
The company estimates that it will save up to $45 million in payroll over the next six months, she wrote.
Hawaiian will receive another $364 million in the form of a loan to provide additional cash for operations, Ingram said.
As demand for travel to Hawaii has plummeted, Hawaiian, which was until the crisis the state’s dominant carrier, has reduced its service to just two daily flights, to Los Angeles and San Francisco.
It also flies three cargo flights a week to Seoul.
While the relief money buys time – for Hawaiian and thousands of smaller businesses in Hawaii – there’s still the overarching question of whether it will last until the state gets past the worst of the crisis.
“Obviously there’s still a lot of uncertainty about when that time will be,” he said.
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