US Airlines Asks for Bailout
Mar 18, 2020, 5:55 am
#1
Original Poster
Join Date: Jul 2018
Posts: 159
US Airlines Asks for Bailout
US airlines slammed by the coronavirus are requesting an aid package from the federal government that could amount to about $50 billion, according to industry group Airlines for America.
The requested aid would be in the form of loans, grants and tax relief. The airlines are looking for up to $25 billion
in grants for passenger air carriers and $4 billion in grants to cargo carriers, and the same amounts in loans or
loan guarantees, Airlines for America outlined in a briefing document.
"US carriers are in need of immediate assistance as the current economic environment is simply not sustainable," the group
said in a statement. "This is compounded by the fact that the crisis does not appear to have an end in sight."
The US airlines are not the only ones asking for help from their national governments in the face of the sharp
decline in travel. Monday the three biggest global airline alliances, oneworld, SkyTeam and Star Alliance, urged
governments around the world to "evaluate all possible means" to assist the industry. They represent more than 58 of the world's leading carriers.
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 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.The plane manufacturer Boeing on Monday also
said it is talking to "government and industry leaders."
"We're leveraging all our resources to sustain our operations," said spokesperson Gordon Johndroe. "Meanwhile, ready
short term access to public and private liquidity will be one of the most important ways for airlines, airports, suppliers
and manufacturers to bridge to recovery, and we appreciate how the Administration and Congress are engaging with
all elements of the aviation industry during this difficult time."
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 Airlines for America. 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.
The concept of a bailout for airlines got an endorsement from President Donald Trump at his briefing on the virus on Monday.
"We're going to back the airlines 100%," said Trump, saying that their financial problems is "not their fault. It's nobody's fault."
"We're going to be in a position to help the airlines very much. We've told the airlines we're going to help them. It's very important."
The need for the bailout is a stunning reversal of position for the industry and a sign of
just how quickly the demand for air travel in the nation has ground to a near halt.
When airline executives met at the White House with Trump and Vice President Mike Pence on March 4, they did not ask
for a bailout. And as recently as Tuesday, executives from most of the nation's airlines told investors at a JPMorgan online
investor conference that they were not seeking any kind of government assistance.
"We are not going to count on any kind of government intervention," said United Airlines President Scott Kirby at the time.
But on Sunday night Kirby and United CEO Oscar Munoz told United's 100,000 employees that the
airline would cut capacity by 50% in April and May, and it expected that only 20% to 30% of the seats on those remaining planes would be filled.
That is far, far below what United needs to break even. In 2019 the carrier filled 84% of the seats it sold.
On Sunday, United management started discussions with the airline's unions on ways to cut compensation
costs, the largest expense at the airline. It has already offered unpaid leave to employees and it may have
to make changes to pay rates or furloughs. The pilots union at United said in a letter to its membership
that it will work with management to limit the losses in order to protect "the financial future of our airline."
But it also said that the unions and management would announce a "call for action" this week to seek government assistance.
https://edition.cnn.com/2020/03/16/b...out/index.html
The requested aid would be in the form of loans, grants and tax relief. The airlines are looking for up to $25 billion
in grants for passenger air carriers and $4 billion in grants to cargo carriers, and the same amounts in loans or
loan guarantees, Airlines for America outlined in a briefing document.
"US carriers are in need of immediate assistance as the current economic environment is simply not sustainable," the group
said in a statement. "This is compounded by the fact that the crisis does not appear to have an end in sight."
The US airlines are not the only ones asking for help from their national governments in the face of the sharp
decline in travel. Monday the three biggest global airline alliances, oneworld, SkyTeam and Star Alliance, urged
governments around the world to "evaluate all possible means" to assist the industry. They represent more than 58 of the world's leading carriers.
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 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.The plane manufacturer Boeing on Monday also
said it is talking to "government and industry leaders."
"We're leveraging all our resources to sustain our operations," said spokesperson Gordon Johndroe. "Meanwhile, ready
short term access to public and private liquidity will be one of the most important ways for airlines, airports, suppliers
and manufacturers to bridge to recovery, and we appreciate how the Administration and Congress are engaging with
all elements of the aviation industry during this difficult time."
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 Airlines for America. 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.
The concept of a bailout for airlines got an endorsement from President Donald Trump at his briefing on the virus on Monday.
"We're going to back the airlines 100%," said Trump, saying that their financial problems is "not their fault. It's nobody's fault."
"We're going to be in a position to help the airlines very much. We've told the airlines we're going to help them. It's very important."
The need for the bailout is a stunning reversal of position for the industry and a sign of
just how quickly the demand for air travel in the nation has ground to a near halt.
When airline executives met at the White House with Trump and Vice President Mike Pence on March 4, they did not ask
for a bailout. And as recently as Tuesday, executives from most of the nation's airlines told investors at a JPMorgan online
investor conference that they were not seeking any kind of government assistance.
"We are not going to count on any kind of government intervention," said United Airlines President Scott Kirby at the time.
But on Sunday night Kirby and United CEO Oscar Munoz told United's 100,000 employees that the
airline would cut capacity by 50% in April and May, and it expected that only 20% to 30% of the seats on those remaining planes would be filled.
That is far, far below what United needs to break even. In 2019 the carrier filled 84% of the seats it sold.
On Sunday, United management started discussions with the airline's unions on ways to cut compensation
costs, the largest expense at the airline. It has already offered unpaid leave to employees and it may have
to make changes to pay rates or furloughs. The pilots union at United said in a letter to its membership
that it will work with management to limit the losses in order to protect "the financial future of our airline."
But it also said that the unions and management would announce a "call for action" this week to seek government assistance.
https://edition.cnn.com/2020/03/16/b...out/index.html
Mar 18, 2020, 1:51 pm
#2
Join Date: Jan 2010
Posts: 1,333
It's pretty absurd (and very predictable) that large corporations who have been reaping billions in profits recently should be bailed out with grants and handouts, while small businesses operating on razor thin margins are expected to take out a loan to survive. There is no reason whatsoever that companies like United and AA should not be expected to pay back every penny they receive (with interest). Grants should go exclusively to where they are needed most, for the same painfully obvious reasons that multi-millionaires and billionaires should not be getting the same cash handout as someone working in a restaurant. Unfortunately, this all presupposes a fair and functional government, which is a pipe dream at best.