US Airlines Seek $50 Billion Government Bailout After Coronavirus Outbreak

March 16, 2020 Updated: March 16, 2020
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Major airlines sought a U.S. government bailout of more than $50 billion as the White House is urgently drafting a financial assistance package in the wake of the steep falloff in U.S. travel demand.

Airlines for America, the trade group representing American Airlines, United Airlines, Delta Air Lines, Southwest Airlines, and others, said the industry needs $25 billion in grants, $25 billion in loans and significant tax relief to survive. They also seek tax relief that could be worth tens of billions of dollars through the end of at least 2021.

They also seek a package of $8 billion, equally divided in grants and loans for cargo carriers.

The U.S. airlines warned that without action all of their members could run out of money by year-end—and even sooner if credit card companies stared withholding payments.

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American Airlines passenger planes are seen on the tarmac at Miami International Airport in Miami, Fla., on June 8, 2015. (Robyn Beck/AFP/Getty Images)

“This is a today problem, not a tomorrow problem. It requires urgent action,” said Nicholas Calio, president of the airline group. The airlines’ proposal would see them get funds within 15 days of approval.

U.S. carriers have slashed flights and last week met with the White House to sound the alarm for urgent action. The National Economic Council and U.S. Treasury are drafting a proposed assistance package and officials have been in early talks with lawmakers, officials told Reuters.

Separately, Amtrak and U.S. airports are also in talks about receiving urgent government assistance. Amtrak is slashing trains and warned it could see losses of at least hundreds of millions of dollars this year.

White House economic adviser Larry Kudlow told reporters on March 16 the administration is “looking at” assistance to U.S. airlines.

The companies said the grants would compensate them for reduced liquidity—net of financing—for all of 2020 attributable to the coronavirus outbreak.

Air Line Pilots Association President Joe DePete said Monday “any economic relief package must contain strong labor protections for the airline employees who have—or will—suffer financial harm.”

Two people briefed on the matter said the chief executives of all of Airlines for Americas’ members signed off on the request, including United, Atlas Air, Delta, American, Hawaiian Airlines, Southwest and JetBlue Airways Corp.

United said Sunday in the first two weeks of March it had 1 million fewer passengers and is currently projecting revenue in March will be $1.5 billion lower than last March.

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A woman wearing a mask uses hand sanitizer on arrival at Los Angeles International Airport on March 12, 2020. (Frederic J. Brown/AFP via Getty Images)

The airlines warned about the impact of a 30-day domestic ban because that would require them to repay consumers for all tickets purchased within seven days if the service cannot be provided even for non-refundable tickets. That could boost liquidity losses by $7 billion to $10 billion make it harder to obtain credit.

Kudlow added that White House officials will visit the Senate to discuss options on Monday.

“It’s not so much a bailout” for airlines, Kudlow told Fox Business News, calling it liquidity and cash flow help.

“We don’t see any of the airlines failing. But if they get into a cash crunch, we’re going to try to help them. We’re consulting with the House and Senate to see what works. And of course the Treasury Department and the FED have enormous powers on this,” Kudlow said.

United is cutting 50 percent of its flights in April and May, while American said it will cut 75 percent of international capacity. Delta is cutting 40 percent of its flights in the next few months.

Airlines asked the administration to rebate the excise taxes carriers paid into the Air Trust Fund this year and to repeal all federal excise taxes on tickets, cargo, and fuel through the end of at least 2021.

By David Shepardson and Steve Holland