U.S. airlines are asking the federal government for grants, loans and tax relief that could easily top $50 billion to help them recover from a sharp downturn in travel due to the new coronavirus
By
DAVID KOENIG AP Airlines Writer
March 16, 2020, 9:46 PM
4 min read
U.S. airlines are asking the federal government for grants, loans and tax relief that could easily top $50 billion to help them recover from a sharp downturn in travel due to the new coronavirus.
Airlines for America, the trade group representing the carriers, disclosed its request for financial help on Monday, just as more airlines around the world were announcing ever-deeper cuts in service and, in some cases, layoffs.
President Donald Trump pledged to help the airlines, although he did not say what the assistance might look like.
The trade group is asking for $29 billion in federal grants, with $25 billion for passenger airlines and $4 billion for cargo carriers. The airlines are also seeking up to $29 billion in low-interest loans or loan guarantees, and they want federal excise taxes on fuel, cargo and airline tickets to be suspended through the end of next year.
That package would easily surpass the $5 billion in grants and up to $10 billion in loan guarantees that Congress approved after the terror attacks of September 2001, which temporarily grounded all U.S. flights and led to a long slump in domestic travel.
U.S. airlines are coming off a decade marked by record profits. Since January, however, they have been reducing flights, starting with the suspension of flights to mainland China, where the virus outbreak began. The downward spiral in travel has picked up speed in recent days, prompting airlines to announce a succession of increasingly dramatic measures.
Since Friday, United, American and Delta have all announced deeper cuts in flying than they were contemplating just a few days earlier.
Some airlines including United have borrowed recently to shore up their available funds while they are taking in less revenue. Airlines for America said that in its worst-case scenario, the airlines could run out of money in the second half of this year — even sooner if credit card companies withhold cash from sales of airline tickets.
The trade group's members include the six largest U.S. passenger airlines: Delta, American, United, Southwest, Alaska and JetBlue. Cargo carriers FedEx and UPS are also members.
At a White House press conference, Trump vowed to help the carriers but did not give any figures or details about potential assistance.
“We are going to back the airlines 100%. It's not their fault,” he said, adding that they were “having a record season” before the virus outbreak.
On Capitol Hill, lawmakers are evaluating possible steps to help the airlines, including federal loans and giving them cash from a grant program intended for airport infrastructure projects, according to a Republican aide on the House Transportation Committee.
Lawmakers also are looking at letting airports use the money for operational expenses such as cleaning costs or to service debt, said the aide, who was not authorized to speak publicly about the discussions among lawmakers.
Around the globe, airline bookings are plummeting and cancellations soaring as governments restrict travel and people fear being enclosed in an airplane for several hours during a pandemic that has already sickened about 170,000 people and killed more than 6,500.
Late Sunday night, United Airlines announced that it would slash 50% of its flying capacity in April and May and warned that the cuts could extend into the peak summer travel season. Even with thousands fewer flights every week, the airline expects its planes to be only 20% to 30% full at best, and March revenue will be down by $1.5 billion.
“The bad news is that it's getting worse,” CEO Oscar Munoz and President Scott Kirby said in a letter to United’s roughly 96,000 workers. “We expect both the number of customers and revenue to decline sharply in the days and weeks ahead.”
American Airlines on Monday suspended about 75% of its long-haul international flights through at least May 6 and began grounding about 135 planes. It will cut passenger-carrying capacity in the U.S. by 20% in April and 30% in May.
Airlines are talking to unions about taking cuts in pay or hours, and some are cutting executive and management salaries.
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Kevin Freking in Washington contributed to this report.
