Delta Air Lines has agreed to pay $8.1 billion to resolve a lawsuit adopted by the U.S. Department of Justice, which alleges misuse of the federal pandemic relief fund.
The lawsuit alleges that Delta violated conditions relating to the payroll support scheme under the Coronavirus Aid, Relief and Economic Security Act (CAREES Act).
Under the conditions set, companies accepting federal relief funds must impose a pay cap on executives who have won more than $425,000 in 2019.
Delta, who received $11.9 billion in pay support funds, challenged the allegations first surfaced by whistleblowers, adding that he was fully compliant with the terms set forth in the scheme.
The allegations first came to light through third-party financial researchers, and later filed a whistleblower lawsuit.
Of the $11.9 billion received through federal support, DOJ says “at least” $8.2 billion is a form of grants that doesn't need to be repaid.
“The whistleblower alleged that between March 2020 and April 2023, Delta paid corporate officers above the limit set by the contract. Delta then misidentified compliance with the limit and did not notify the Treasury of the violation,” the DOJ state said.
US lawyer Theodore Hertzberg adds: “When businesses accept federal aid, especially the generous pandemic relief funds that are at issue here, they have an obligation to respect the terms imposed on those funds.”
In a statement prepared following the resolution decision, Delta said, “The claims have no merit and have consistently maintained that they have been resolved to avoid the costs and distractions of the litigation.”
“The issue is disagreement on technical issues, including the period of time that will be used to measure executive compensation during the pandemic,” adds SkyTeam Career.
