By Canadian Press

US airlines seek billions in aid as outbreak cripples travel

Mar 16, 2020 | 4:06 PM

U.S. airlines are asking the federal government for grants, loans and tax relief that could easily top $50 billion to help them recover from a sharp downturn in travel due to the new coronavirus.

Airlines for America, the trade group representing the carriers, disclosed its request for financial help on Monday, just as more airlines around the world were announcing ever-deeper cuts in service and, in some cases, layoffs.

President Donald Trump pledged to help the airlines, although he did not say what the assistance might look like.

The trade group is asking for $29 billion in federal grants, with $25 billion for passenger airlines and $4 billion for cargo carriers. The airlines are also seeking up to $29 billion in zero-interest loans or loan guarantees, and they want federal excise taxes on fuel, cargo and airline tickets to be suspended through the end of next year and possibly longer.

That package would easily surpass the $5 billion in grants and up to $10 billion in loan guarantees that Congress approved after the terror attacks of September 2001, which temporarily grounded all U.S. flights and led to a long slump in domestic travel.

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U.S. airlines are coming off a decade marked by record profits. Since January, however, they have been reducing flights, starting with the suspension of flights to mainland China, where the virus outbreak began. The downward spiral in travel has picked up speed in recent days, prompting airlines to announce a succession of increasingly dramatic measures.

Southwest said Monday that cancellations are outnumbering new bookings for several days, mostly in March and April. It expects revenue trends to get worse during the rest of March and the second quarter.

Southwest withdrew its 2020 financial forecast, said it will cut capacity 20% from mid-April through early June, and imposed a hiring freeze. The airline also said it completely drew down $1 billion in new credit from lenders as soon as the deal closed.

Since Friday, United, American and Delta all announced deeper cuts in flying than they were contemplating just a few days earlier.

Airlines for America said that in its worst-case scenario, the airlines could run out of money in the second half of this year — even sooner if credit card companies withhold cash from sales of airline tickets.

The trade group’s members include the six largest U.S. passenger airlines: Delta, American, United, Southwest, Alaska and JetBlue. Cargo carriers FedEx and UPS are also members.

At a White House press conference, Trump vowed to help the carriers but did not give any figures or details about potential assistance.

“We are going to back the airlines 100%. It’s not their fault,” he said, adding that they were “having a record season” before the virus outbreak.

On Capitol Hill, lawmakers are evaluating possible steps to help the airlines, including federal loans and tax relief, according to a Republican aide on the House Transportation Committee.

Lawmakers also are looking at letting airports use money raised for infrastructure projects on operating costs such as janitorial expenses or servicing debt, said the aide, who was not authorized to speak publicly about the discussions among lawmakers.

Senator Edward Markey, D-Mass., said Congress should put conditions on aid to airlines. “Financial assistance may be needed for some of our most impacted industries,” he said, “but any infusion of money to the airlines must have some major strings attached,” including a ban on “unfair” fees for changing or cancelling a ticket, and targets for reduce carbon emissions from airline planes.

Around the globe, airline bookings are plummeting and cancellations soaring as governments restrict travel and people fear being enclosed in an airplane for several hours during a pandemic that has already sickened about 170,000 people and killed more than 6,500.

Late Sunday night, United Airlines announced that it would slash 50% of its flying capacity in April and May and warned that the cuts could extend into the peak summer travel season. Even with thousands fewer flights every week, the airline expects its planes to be only 20% to 30% full at best, and March revenue will be down by $1.5 billion.

“The bad news is that it’s getting worse,” CEO Oscar Munoz and President Scott Kirby said in a letter to United’s roughly 96,000 workers. “We expect both the number of customers and revenue to decline sharply in the days and weeks ahead.”

American Airlines on Monday suspended about 75% of its long-haul international flights through at least May 6 and began grounding about 135 planes. It will cut passenger-carrying capacity in the U.S. by 20% in April and 30% in May.

Airlines are talking to unions about taking cuts in pay or hours, and some are cutting executive and management salaries.

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Kevin Freking in Washington contributed to this report.

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This story has been corrected to show that Congress is considering letting airports, not airlines, use money set aside for airport infrastructure projects to pay for operating expenses.

David Koenig, The Associated Press