Airlines will be restricted from stock buybacks, issuing dividends, and outlandish salaries for executives under the new House bailout proposal

AP Photo/J. Scott Applewhite

Speaker of the House Nancy Pelosi, D-Calif., updates reporters as lawmakers continue work on a coronavirus aid package, on Capitol Hill in Washington, Thursday, March 12, 2020.

• Airlines will be prohibited from buying back stock or issuing dividends under the bailout package the House plans to propose.
• The bill will provide $58 billion for the aviation industry, including $37 billion in worker payroll grants - effectively protecting jobs - and $21 billion in loans.
• Past stock buybacks have become a contentious tactic as the airline industry, ravaged by the coronavirus outbreak, seeks federal assistance.
• This is a developing story. Check back for updates.
• Visit Business Insider's homepage for more stories.

Airlines receiving financial aid from the federal government will be prohibited from buying back stock or issuing dividends to shareholders under the new bailout package to be in the House of Representatives, Business Insider has learned.

The bill, which the House Majority Leader Nancy Pelosi will introduce to counter the GOP-driven Senate bill, will provide significant relief for airlines, as well as industry employees.

The Senate failed to advance the bill on Sunday night, falling short of the required votes with Democrats opposed, arguing it did not do enough to protect workers, or to regulate companies receiving bailouts.

US airlines, through lobbying organization Airlines For America, have asked for $58 billion in aid: $29 billion in payroll grants, and $29 billion in loans.

The draft of the House bill which was dated Sunday night, would offer airlines the same amount, but in a different distribution. $37 billion would be allocated for payroll grants across the industry, and unsecured loans of up to $21 billion.

Airline employee unions have argued that providing aid to the airlines in the form of payroll grants is the fastest way to provide assistance to workers, since there is already a disbursement mechanism in place.

Another $3 billion in payroll grants would be provided for airline contractors, which have been similarly pressured as travel has plummeted.

The bill specifically prohibits share repurchases using the money provided by the bailout package. It also forbids "any distribution of funds to shareholders or bondholders, including stock dividends."

Additionally, airlines receiving aid would be required to accept limits on CEO salaries for 10 years. Compensation cannot be more than "50 times the median compensation earned by all employees of such air carrier in calendar year 2019," and severance or separation benefits can not exceed "the maximum total compensation received from the air carrier in calendar year 2019."

Linette Lopez contributed reporting.

This is a developing story. Check back for updates.

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