U.S. airlines, warning that they could run out of money before
the end of the year due to the Covid-19 epidemic, are appealing to the federal government for a combination
of $58 billion in grants and interest-free loans.
They are also asking for the temporary suspension of airline
industry excise taxes, including taxes on tickets, cargo and fuel.
“The downturn in demand for commercial air transportation
related to Covid-19 is causing unprecedented harm to the U.S. airline
industry,” said Airlines for America (A4A), whose members include American,
Delta, United, Southwest, Alaska, JetBlue, Hawaiian and cargo carriers UPS,
Atlas Air and FedEx. “Net bookings for the next few months have been exceeding
negative 100% as cancellations are rapidly outpacing new bookings (2 to 1 for
some carriers), and trending worse each day. The dramatic and alarming plunge
is a combination of fear, macroeconomic deceleration and government- and
business-imposed travel restrictions.”
A4A said its 10 members currently have combined liquidity of
Carriers are already taking their own measures to reduce
costs, such as lowering executive salaries and offering temporary leave to
employees. But even when those and other savings (such as lower fuel costs,
reductions in agent commissions and reductions in landing fees) are considered,
A4A still projects that liquidity would drop by 67% through June under what it
calls a pessimistic scenario. By the end of the year, liquidity would drop to a
deficit of $14 billion under that same scenario.
The trade group also laid out what it called its optimistic
scenario, in which a liquidity drop of 45% would happen through June. Liquidity
would drop 59%, to $16 billion, by year’s end. The pessimistic scenario is more
likely A4A said.
A potential 30-day domestic travel ban would worsen the
optimistic estimate by $7 billion and the pessimistic estimate by $10 billion,
The lobbying group is calling for immediate aid of $25
billion in federal grants for U.S. passenger carriers to be used through the
end of the year, plus $4 billion for cargo carriers.
In addition, A4A is calling on the Federal Reserve to assist
with $25 billion in unsecured loans and loan guarantees for passenger airlines
and $4 billion in unsecured loans and loan guarantees for cargo carriers.
The group also requested a rebate on all excise taxes paid
by U.S. airlines thus far this year along with the cessation of those taxes for
the remainder of the year. Airlines pay excise taxes on fuel, international
arrivals and departures, domestic passenger tickets and on sales of loyalty
regional carrier Silver Airways has called for aid from local, state and federal authorities.
“On behalf of Silver
Airways’ 1,000 employees and hundreds of thousands of customers we serve
annually, we are in dire need of any assistance you can provide that will allow
us to continue flying and providing the safe, reliable air transportation that
is critical to the Southeastern U.S., Bahamas and the Caribbean, CEO Steve
Rossum wrote in a letter to federal officials.