Trump pledges help for aid-seeking airlines
President Donald Trump said the U.S. government would strongly back the nation’s airlines, hours after the industry said it needed $58 billion in aid as travel demand collapses because of the coronavirus.
“As far as the airlines are concerned, we are going to back the airlines 100 percent,” Trump said Monday, also cautioning Americans to avoid discretionary travel as well as restaurants and schools. “We’re going to help them very much.”
The sudden need for public assistance underscores the depth of the economic pain for airlines, which were riding high before the outbreak battered travel demand. The trade group representing large carriers, Airlines for America, released a memo Monday outlining urgent needs and describing a dire financial situation.
“The current economic environment is simply not sustainable, and it is compounded by the fact that the crisis does not appear to have an end in sight,” said the group, which is asking for $50 billion for passenger airlines and $8 billion for cargo carriers.
The industry is also seeking a rebate of excise taxes paid by passengers to the government from Jan. 1 through March 31 and a temporary repeal of the tax, according to the group.
The swift drop in passengers, both from government-imposed restrictions and people across the U.S. shying away from travel, has been worse than the aftermath of the 9/11 terrorist attacks, the trade group said.
In Europe, governments are considering aid packages that could total $20 billion to save carriers including Air France-KLM and Deutsche Lufthansa AG, estimated Jefferies analyst Sandy Morris. The mechanisms include tax breaks and loans that could be later converted into equity.
Airline aid is a key area under discussion, said Larry Kudlow, President Donald Trump’s economic adviser. House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin have been holding talks on airline assistance, Kudlow said Monday.
“It’s not so much a bailout,” Kudlow said. “Airlines are a key channel in the economy. This is more in our view a liquidity help. Cash flow help. Because again, we see this virus problem as a matter of months, not years. And we don’t see the airlines failing. But if they get into a cash crunch, we’re going to try to help them.”
Airports are requesting $10 billion in unspecified aid to help offset their own financial losses, said a person familiar with the industry’s request who wasn’t authorized to speak on the issue.
After years of prosperity and rising stock prices for airlines, Airlines for America on Monday used grim language to describe the current environment.
“This is an extremely fluid situation that is evolving rapidly. The rapid spread of COVID-19, along with the government- and business-imposed restrictions on air travel, are having an unprecedented and debilitating impact on U.S. airlines,” the group said.
A Standard & Poor’s index of major U.S. carriers fell 7.6 percent at the close of trading in New York, paced by United Airlines Holdings Inc.’s 15 percent tumble. By contrast, American Airlines Group Inc. surged 11 percent, extending gains after Trump’s remarks on government support. The airline index tumbled 42 percent this year, while the S&P 500 Index has dropped 26 percent.
Carriers are stepping up efforts to reduce spending, including drastically cutting flying, parking aircraft and reaching agreements with some unions for voluntary leaves of absence. Unions also are joining the airlines to lobby in Washington for the aid package that carriers say is needed to keep them afloat.
“In the coming days, we will ask for your support to join in efforts to call on our lawmakers on Capitol Hill for assistance for our industry and our flight attendants,” Lori Bassani, president of the Association of Professional Flight Attendants, told members in a message.
“We have already reached out to other unions to form a joint multipronged effort,” said Bassani, whose union represents workers at American Airlines.
Unions at United Airlines also will take part in a “call to action” for government assistance, the Air Line Pilots Association said in a message to aviators.