COVID-19

Airlines ask for bailout extension

Andy Uhler Sep 23, 2020
Heard on: Marketplace
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United Airlines CEO Scott Kirby joins fellow airline executives, union heads and politicians at a news conference calling for additional financial support to avoid layoffs on Sept. 22 outside the U.S. Capitol. Chip Somodevilla/Getty Images
COVID-19

Airlines ask for bailout extension

Andy Uhler Sep 23, 2020
United Airlines CEO Scott Kirby joins fellow airline executives, union heads and politicians at a news conference calling for additional financial support to avoid layoffs on Sept. 22 outside the U.S. Capitol. Chip Somodevilla/Getty Images
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Airline CEOs and union leaders this week beseeched Congress for an extension of the Payroll Support Program — part of the CARES Act that amounted to a $25 billion industry bailout.

The funding was supposed to help airlines maintain their payrolls until travel demand returned, but that’s not happening fast enough.

Now the industry is warning of a massive wave of layoffs if lawmakers don’t extend funding before Oct. 1.

According to the trade group Airlines for America, passenger volume is off about 65% from a year ago. And airlines are collectively burning through $5 billion each month. 

CEO Nick Calio said airlines are asking for a six-month extension “because hopefully by then we will be over the hump. And we will start to have a pickup in travel by next spring.”

The conditions of the previous bailout protected workers until Oct. 1. 

Calio warned that up to 100,000 airline employees could soon join the ranks of the unemployed. 

And Robert W. Mann, a former airline executive and industry consultant, said a second bailout would help the U.S. economy recover faster when the pandemic wanes. 

“If the industry were to fall into disrepair, if it were to fall into destructive restructuring during the pandemic, the question would be, what would you have around to help you around on the other side?” Mann said.

When, exactly, we get to the other side of the pandemic is still murky. 

Veronique de Rugy, senior research fellow at George Mason University’s Mercatus Center, said another $25 billion is not going to solve the problem.

“This is just postponing the inevitable,” she said. “As long as the demand doesn’t go back up, this is just basically a Band-Aid patch.”

She said bankruptcy would be the best option. Airlines have shown they can emerge from restructuring healthier. And she said that means troubled airlines don’t pose a major risk to the economy at large.

COVID-19 Economy FAQs

How many people are flying? Has traveled picked up?

Flying is starting to recover to levels the airline industry hasn’t seen in months. The Transportation Security Administration announced on Oct. 19 that it’s screened more than 1 million passengers on a single day — its highest number since March 17. The TSA also screened more than 6 million passengers last week, its highest weekly volume since the start of the COVID-19 pandemic. While travel is improving, the TSA announcement comes amid warnings that the U.S. is in the third wave of the coronavirus. There are now more than 8 million cases in the country, with more than 219,000 deaths.

How are Americans feeling about their finances?

Nearly half of all Americans would have trouble paying for an unexpected $250 bill and a third of Americans have less income than before the pandemic, according to the latest results of our Marketplace-Edison Poll. Also, 6 in 10 Americans think that race has at least some impact on an individual’s long-term financial situation, but Black respondents are much more likely to think that race has a big impact on a person’s long-term financial situation than white or Hispanic/Latinx respondents.

Find the rest of the poll results here, which cover how Americans have been faring financially about six months into the pandemic, race and equity within the workplace and some of the key issues Trump and Biden supporters are concerned about.

What’s going to happen to retailers, especially with the holiday shopping season approaching?

A report out recently from the accounting consultancy BDO USA said 29 big retailers filed for bankruptcy protection through August. And if bankruptcies continue at that pace, the number could rival the bankruptcies of 2010, after the Great Recession. For retailers, the last three months of this year will be even more critical than usual for their survival as they look for some hope around the holidays.

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