Airline industry seeking more than $50 billion in government aid amid coronavirus crisis

Airline industry seeking more than $50 billion in government aid amid coronavirus crisis


In addition, the industry is asking for $25 billion in loans and temporary tax relief in the form of a repeal of all federal excise taxes on tickets, fuel and cargo through the end of 2021 and a rebate of all federal excise taxes paid between January and March of 2020.

“This is a today problem, not a tomorrow problem, said Nicholas E. Calio, president and chief executive of Airlines for America. “It requires urgent action.”

President Trump on Monday said his administration would support the airlines, but offered no specifics.

“As far as the airlines are concerned, the airlines, we’re going to back the airlines 100 percent,” Trump said during his daily coronavirus task force briefing. “It’s not their fault.We’ve told the airlines we’re gonna help them. We’re going to be helping them very much. It’s very important.”

The A4A proposal is more than triple what the airline industry received in the days after the Sept. 11, 2001 terrorist attacks. That package included $5 billion in direct aid and $10 billion in loan guarantees. The measure that ultimately passed also included limits on executive compensation, specifying that any airline executive who made more than $300,000 in 2000 could not receive a raise for the following two years.

“You have to remember the A4A’s job is to shoot for the universe in hopes of getting the moon,” said aviation analyst Henry Harteveldt, president of Atmosphere Research Group. “And so it’s an aggressive request and it’s probably the starting point for a series of negotiations with the administration and potentially Congress for relief.”

The request comes as airlines face an unprecedented slowdown in passenger demand and newly imposed flight restrictions that affect travelers from 28 countries in Europe. Despite waiving change fees and discounting airfares — in some cases by as much as 90 percent — travelers are staying away.

In a letter to employees, Delta Air Lines Chief Executive Ed Bastian said the number of cancellations is outpacing the number of bookings. The carrier expects to cut capacity by 40 percent in the next few months.

“The speed of the demand fall-off is unlike anything we’ve seen — and we’ve seen a lot in our business,” he wrote.

Over the weekend two other carriers also announced dramatic cuts in service. American Airlines said it would cut roughly 75 percent of its international flights through May 6 and ground nearly all of its widebody jets.

And in a message to employees Sunday signed by United Chief Executive Oscar Munoz and President J. Scott Kirby, the airline said that more than a million fewer customers flew during the first two weeks of March than during the same period last year. Already, the airline is forecasting revenue this March will drop by $1.5 billion compared to last year. In response, the airline will cut capacity by 50 percent for March and April, they said.

The dramatic shift in tone comes less than two weeks after Trump met with airline executives at the White House to discuss their response to the coronavirus outbreak.

When a reporter asked whether the president was considering offering financial support to the airlines, Trump said the possibility had not been discussed.

“Don’t ask that question, please,” the president said. “Because they haven’t asked it.”

Lawmakers have already signaled a willingness to help the industry with House Republicans saying that the focus will go beyond just U.S. airlines.

“We are currently reviewing A4A’s proposal, as well as many other proposals from our affected stakeholders,” said Justin Harclerode, Republican spokesman for the House Committee on Transportation and Infrastructure. “Airlines may be the most visible part of our aviation system, but we have to ensure that a stabilization package addresses the needs of airports, regional and charter airlines, cargo airlines, manufacturers, and general aviation business.

“ This crisis is bigger than any one proposal, and all options are on the table as we work to ensure the continued stability of our national air transportation system,” Harclerode said.

According to an analysis released Monday by Airlines Council International — North America, passenger traffic is forecast to drop by 49 percent or 222 million enplanements in the first half of 2020. Financial losses could top $87 billion for calendar year 2020.

Kevin M. Burke, president and chief executive of ACI-NA, said that while airports are making cuts, “there are limits to that belt-tightening.”

Airlines aren’t the only ones in the transportation sector seeking help. Amtrak and its state partners estimate the railroad will need $1 billion in supplemental federal funding “through the remainder of the year to make up for the unprecedented loss of ridership and revenue and to minimize employee and service impacts.”

Sen. Edward J. Markey (D-Mass.) acknowledged that financial support may be needed, but said it would not be a blank check.

“Any infusion of money to the airlines must have some major strings attached — including new rules to prohibit consumer abuses like unfair change and cancellation fees; protections for front-line workers like flight attendants, pilots, and airport workers; special consideration for our smaller, regional carriers not represented by the major trade associations; and the development of long-term strategies and targets to reduce the carbon footprint of the airline industry,” Markey said in a statement. “As our next coronavirus stimulus package is developed, I will demand these conditions be met before supporting any airline bailout.”

Luz Lazo and Felicia Sonmez contributed to this report.



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