US airlines are in talks with the government to get at least $50 billion in financial assistance, more than three times the size of the industry bailout after the September 11 attacks, according to people briefed on the discussions.
The exact form and amount of aid carriers are seeking is being discussed, and could include government-backed loans, cash grants, or other measures, including tax and fee relief, according to some people and a proposal published by a airline trade group on Monday.
Airlines have been stunned by the rapid drop in their bookings as the new coronavirus has spread worldwide.
As the worst-case scenarios imagined just a few days or weeks ago have been met, carriers have been quick to make deeper cuts to their schedules.
Meanwhile, top leaders of the aircraft maker Boeing Co. have been in talks with congressional and Trump administration officials about possible financial assistance to the manufacturer and its suppliers, as part of a broader aid package for the industry of aviation, a company executive said Monday.
“We can make the aviation sector recover faster if there is assistance,” said the executive. Details of any possible requests for assistance were not immediately available.
Boeing continues to build wide-body aircraft at its Everett, Washington, factory near Seattle, while production of the narrow-body 737 MAX halts amid a prolonged ground connection after two fatal crashes.
“We want to protect our employees and we would rather not go to layoffs,” said the Boeing executive.
The MAX crisis has already strained the aerospace giant’s finances, but Boeing has said it aimed to avoid layoffs as aviation officials weigh to return that plane to service.
United Airlines Holdings Inc. said Sunday night that it would cut its planned flight in half in April and May and is in talks with its unions about measures that could include permits, pay cuts or other measures to reduce payroll expenses.
Delta Air Lines Inc. and American Airlines Group Inc. have also announced severe flight cuts, hiring freezes and unpaid voluntary employee leave.
The three carriers have revealed that they are in talks with the government, but the amount of assistance being discussed has not been previously reported.
Airlines for America, the industry trade group, issued a proposal on Monday for $50 billion in aid that had circulated privately in recent days.
The trade group argued that half of the assistance should come in the form of direct donations to the airlines.
The proposal also outlines a $25 billion program in which the Federal Reserve would purchase financial instruments or provide interest-free loans or loan guarantees to passenger and cargo carriers.
It also includes provisions for rebates of excise taxes, including those on tickets, cargo and fuel, that airlines paid in the first quarter and a repeal of those taxes until at least December 31, 2021.
But some lobbyists on behalf of the airlines believe that figure may not be enough given the interruption of air travel is likely to last for months, leaving carriers with heavy debt burdens and depressed cash flows.
“They could be shooting too low,” said one person involved in the talks.
The Trump administration is using the post-September 11 with bailouts passed by Congress in 2001 as a template for talks with carriers, people involved in the discussions said.
Lawmakers in 2001 made $5 billion in direct payments to airlines after terrorist attacks that led to a three-day closure of North American airspace.
They also allocated up to $10 billion to support U.S. airlines through a loan program, although only $1.56 billion in guarantees were authorized, including companies that ended up failing.
“We don’t see airlines failing, but if they have a cash crisis, we’re going to try to help them,” National Economic Council director Larry Kudlow told reporters at the White House on Monday. Mr. Kudlow said that “many” airlines had asked for help.
“We are in contact about their balance sheets and their cash flow,” he said.
Source: Latercera
