Delta Air Lines Agrees To Pay Over $8 Million Settlement Over Alleged Misuse Of Pandemic Relief Funds - Delta Air Lines (NYSE:DAL)

Delta Air Lines Inc. DAL has reached an agreement with the U.S. Department of Justice to pay $8.1 million to settle allegations of misusing federal relief funds during the pandemic.

What Happened: The Justice Department stated that Delta Air Lines allegedly violated the terms of the federal relief funds it received during the pandemic. The airline received around $11.9 billion under the Payroll Support Program (PSP), a program established by the CARES Act to aid businesses and airlines.

Check out the current price of DAL stock here.

The PSP mandated that companies receiving federal relief funds place limits on the compensation of their highest-paid executives. The Justice Department claimed that Delta exceeded the permitted limits and then falsely certified that it complied. The investigation began after a whistleblower lawsuit was filed by an independent researcher.

Delta Airlines received at least $8.2 billion in non-repayable grants through the Payroll Support Program (PSP), with the condition that it would adhere to compensation limits until April 2023. However, it is alleged that between March 2020 and April 2023, the airline exceeded those caps in payments to certain corporate officers and did not inform the Treasury Department of the violation.

The U.S. Attorney's Office for the Northern District of Georgia clarified that the claims settled are merely allegations and that no liability has been established.

Delta, however, maintains its innocence and states that it “strongly believes it fully complied with all requirements of the CARES Act.” The airline is choosing to settle to avoid the costs associated with litigation.

Why It Matters: This settlement comes at a time when Delta Air Lines has been showing promising signs of growth. The airline’s Q2 results and guidance affirm that the strengths present in 2024 and Q1 2025 remain, providing solid cash flow and the ability to improve shareholder value this year, next, and over time. This has led to predictions of new highs for Delta in 2025.

Delta’s strong performance is attributed to a notable increase in high-margin revenue streams, including premium travel and loyalty programs. Furthermore, Delta’s Q2 strong earnings led to analysts increasing their forecasts. The airline’s performance was driven by a notable increase in high-margin revenue streams, including premium travel and loyalty programs.

According to Benzinga Edge Stock Rankings, Delta Air Lines has a growth score of 72.87% and a momentum rating of 51.89%. Click here to see how it compares to other leading airline companies.

READ MORE: