American Airlines to Cut Service Unless More Aid Is Provided

American Airlines to Cut Service Unless More Aid Is Provided
An American Airlines airliner sits near a hanger at Dallas/Fort Worth International Airport, Texas, on April 4, 2012. (Tim Sharp/Reuters)
Tom Ozimek
American Airlines CEO Doug Parker told CNBC on Thursday that the carrier will be forced to cut service unless more federal relief is provided to counteract the impact on air travel from the outbreak of the CCP (Chinese Communist Party) virus.

“We can’t continue to wait. If forced to, of course, we will indeed discontinue service to a lot of markets,” Parker told the outlet, referring to lack of progress in talks over relief measures to airlines.

The company has already discontinued service to 13 cities through November.

Unless more aid is forthcoming, “there will absolutely be discontinuation of service to small communities, and there will be much less service to larger communities,” he said.

Parker’s comments come as prospects for airline relief in the near term look increasingly bleak after House Speaker Nancy Pelosi (D-Calif.) said there would be no stand-alone aid for airlines unless it’s part of a comprehensive relief package.

President Donald Trump called off talks with congressional Democrats this week after Pelosi rejected the White House offer of a $1.6 trillion deal, while accusing the speaker of “not negotiating in good faith.”

Trump then called for Congress to pass relief for airlines and provide more money for small businesses under the Paycheck Protection Program.

“The House & Senate should IMMEDIATELY Approve 25 Billion Dollars for Airline Payroll Support, & 135 Billion Dollars for Paycheck Protection Program for Small Business. Both of these will be fully paid for with unused funds from the Cares Act. Have this money. I will sign now!” the president wrote on Twitter.

The president also called for a standalone bill for direct payments to Americans, writing in a tweet: “If I am sent a Stand Alone Bill for Stimulus Checks ($1,200), they will go out to our great people IMMEDIATELY. I am ready to sign right now. Are you listening Nancy?”

Meanwhile, another 840,000 American workers filed for state unemployment benefits for the week ended Oct. 3, a moderate drop of 9,000 from the week before and a historically elevated number that suggests the labor market recovery is slowing.

Job gains from the reopening of businesses appear to be fading, with last Friday’s employment report for September—the last one before the Nov. 3 presidential election—showing the fewest number of jobs created since the labor market began recovering in May. Around half of the 22.2 million people who lost their jobs in the early days of the pandemic remain out of work.

Economists are predicting a further slowdown in hiring through the rest of 2020 and into 2021, especially without another federal pandemic assistance package.

Meanwhile, Federal Reserve Chairman Jerome Powell said at an event on Tuesday that the economic rebound could still slip into a downward spiral if the CCP virus outbreak is not effectively controlled and if growth is not sustained.

“The expansion is still far from complete,” Powell said in remarks delivered online to the National Association for Business Economics. He added that if the recovery slows too much it could lead to a situation where “weakness feeds on weakness” and triggers “recessionary dynamics.”

With cases of the CCP virus rising across much of the country and a surge expected in the fall, economists fear reimposition of restrictions on businesses, especially in the hard-hit services sector.