U.S. airlines ask for aid package
U.S. airlines have asked the government for an aid package that could top $50 billion.
AP’s David Koenig reported:
With each day that the coronavirus outbreak spreads and claims more lives, the damage to global airlines rises too. U.S. carriers on Monday put a price tag on their pain: They asked the federal government for more than $50 billion in rescue aid.
It is a staggering request for an industry that has chalked up tens of billions in profits over the past decade. It would far exceed the bailout that airlines got after the terror attacks of September 2001.
Airlines CEOs have been making the rounds in Washington and making phone calls to lobby for assistance in the last few days. Airlines for America, the trade group representing all the leading U.S. passenger and cargo airlines, finally provided some details about what the airlines want.
They are asking for $29 billion in federal grants: $25 billion for passenger airlines, $4 billion for cargo carriers. They also want up to $29 billion in zero-interest loans or loan guarantees, split the same way between passenger and cargo carriers. And they want federal excise taxes on fuel, cargo and airline tickets to be suspended through the end of next year and possibly longer.
Leslie Josephs from CNBC wrote:
The aid, if received, would be the industry’s first bailout since the wake of the Sept. 11, 2001, attacks and the largest ever. It is also the clearest sign yet of the financial damage coronavirus and the draconian measures governments are taking to stop it are having on American businesses.
Airlines for America, which represents carriers including Delta, United, American and Southwest, recommended passenger carriers immediately receive up to $25 billion in grants to compensate for reduced liquidity and in the medium term $25 billion in low- or zero-interest loans.
“In the short space of two weeks, U.S. airlines have seen their positions of strong financial health deteriorate remarkably rapidly,” Airlines for America said in an outline of its recommendations. “The downturn in demand for commercial air transportation related to COVID-19 is causing unprecedented harm to the U.S. airline industry.”
CNN’s Gregory Wallace, Phil Mattingly, Kylie Atwood, and Chris Isidore reported:
The US aid package has been discussed with key lawmakers and staff, as on Capitol Hill and the Trump administration, two sources said.
The discussions were described as early-stage. But one source noted there is a growing recognition from the federal government that conditions “are getting very bad, very fast.”
In addition to the request to help the airlines, a trade group for the nation’s airports is requesting a separate $10 billion bailout, an airport industry source told CNN.
The request for help is in line with anticipated airport revenue declines tied to the sharp drop in revenue that comes from airlines slashing their flight schedules. Most of the fees airlines pay to airports are based on the number of flights that take off and land.
Most of America’s major airlines are projected to run out of cash some time between June 30 and the end of the year without help, according to the trade group.
But the crisis may actually be more pressing than that.
If the nation’s credit card companies start to withhold payments to the airlines out of fear that there could be bankruptcy filings that would turn them into creditors, the airlines could run out of cash before June 30, according to the trade group.