Running on empty, airlines fight for life

US airlines are collectively burning more than US$10 billion in cash a month and averaging fewer than two dozen passengers per domestic flight because of the coronavirus pandemic, industry trade group Airlines for America said in prepared testimony seen by Reuters ahead of a US Senaskin the hearing yesterday.

Even after grounding more than 3,000 aircrafts, or nearly half the active US fleets, the group said its member carriers, which include the four largest US airlines, were averaging just 17 passengers per domestic flight and 29 passengers per international flight.

“The US airline industry will emerge from this crisis a mere shadow of what it was just three short months ago.” The group’s chief executive Nicholas Calio will say according to his prepared testimony.

Net booked passengers have fallen by nearly 100 percent year-on-year, according to the testimony before the Senate Commerce Committee. The group warned a bankruptcy will happen if carriers were to refund all tickets, including those purchased as non-refundable or those canceled by a passenger instead of the carrier.

Separately, Eric Fanning, who heads the Aerospace Industries Association, will ask Congress to consider providing “temporary and targeted assistance for the ailing aviation manufacturing sector,” in testimony made publicly by the group.

Boeing Co said last week it would cut 16,000 jobs by the end of the year, while GE Aviation plans to cut up to 13,000 jobs and airplane supplier Spirit AeroSystems Holdings Inc is cutting 1,450 jobs.

Fanning will say at the hearing that “there is strong support in our industry for a private-public partnership to protect jobs and keep atrisk employees on the payroll through the pandemic.”

He will also raise concerns about several Federal Reserve and US Treasury lending programs that have “conditions that prevent companies from accessing this aid with the speed and flexibility required.”

US airlines have canceled hundreds of thousands of flights, including 80 percent or more of scheduled flights into June as US passenger traffic has fallen by 95 percent since March. They are conducting additional sanitizing measures and requiring all passengers to wear face masks.

The US Treasury has awarded nearly US$25 billion grants in cash to airlines to help them pay employees in exchange for not sacking workers through September 30.

Major airlines have warned they will likely need to make additional cuts later this year to respond to a long-term decline in travel demand.

(Reuters)