The Treasury's Assistance to the Airline Industry and National Security Businesses During the COVID-19 Pandemic

At the beginning of the COVID-19 pandemic, during which air travel fell sharply, lawmakers enacted the Coronavirus Aid, Relief, and Economic Security (CARES) Act. That law included provisions that authorized the Treasury to provide broad-based assistance to the airline industry through grants to maintain employment and a loan program to support air carriers, related businesses, and businesses critical to national security. The assistance was intended to help stabilize employment in the airline industry while avoiding further economic contraction.

In this report, the Congressional Budget Office examines the terms and conditions of that assistance and the resulting economic and budgetary effects. Most of the assistance was provided through the Payroll Support Program and the Section 4003 Loan Program.

Payroll Support Program. Lawmakers provided $63 billion for the Payroll Support Program through the CARES Act and two subsequent laws; the first round of assistance offered grants to cover six months of payroll expenses, and later rounds provided less funding. A total of $59 billion was distributed, and most of the unused portion was eventually rescinded by Congress. To compensate the federal government, the Treasury required businesses that received the most assistance to issue $15 billion of notes. In addition, publicly traded companies were required to issue warrants (initially valued at $1.5 billion) to the government.

CBO originally estimated a credit subsidy cost (which is recorded on an accrual basis, or when the costs are incurred) of $24 billion for the Payroll Support Program established through the CARES Act: $23 billion for the grants and $1 billion for the notes. For additional funds authorized in subsequent laws, CBO estimated the cost of the program on a cash basis (meaning that costs are reported when they are paid) to match how the Administration reported those costs in the budget; on such a basis, CBO estimated the cost of the program to be $28 billion. More than half of the notes remained outstanding as of April 2026.

Section 4003 Loan Program. The CARES Act authorized up to $46 billion of loans to air carriers and national security businesses; less than $3 billion of that amount was distributed.

For those loans, CBO estimated a credit subsidy cost of $2.3 billion and returns on the warrants of about $1 billion (measured on a cash basis). When it made that estimate, CBO had few details about the programs from the Treasury and no basis to estimate which air carriers and businesses would seek loans. CBO overestimated the program's cost, mostly because of the low participation. The Administration's 2027 budget reported a revised estimate of less than $10 million for the subsidy cost of the loans and warrants.