Major airlines in the United States lament that without a federal bailout, they might have to lay off thousands of workers. This is the air transport industry’s response to the many cancelations occasioned by the spread of coronavirus in the US, as well as the years of struggling and bad business experienced by the airlines.
Apart from the fact that major airlines may lay off workers without federal aid, some said they will be suspending share buybacks and dividend payment this time around. And there is also another problem: with regional airlines quitting operations in several markets, smaller airlines may run out of business with many American cities having no means of air travel again.
Two of these major airlines are United Airlines and Delta Air Lines. The former said they may have to sack employees by this month-end if Washington fails to help, and the latter said there are no dividends and share buybacks this time around for shareholders.
United Airlines CEO Oscar Munoz reportedly told company workers that salary will be cut down to about 60% in April, and Delta Ed Bastian stated that his airline’s expected revenue for the second quarter may drop by 80% or approximately $10 billion when compared to the earning for the same period for 2019.
“While many in Washington, D.C. now realize the gravity of this situation, time is running out,” United Airlines stated.
Unfortunately, while the airline sector demanded a federal bailout of $58 billion and relief from excise taxes through to 2021, the bailout may only be available as grants and loans if it is ever granted. In fact, Senate Republicans drafted a bill for the fund to be released, but the conditions for accessing it may not be in the favor of many airlines.
Meanwhile, the Regional Airline Association stated that several airlines may be grounded without the federal bailout and those small cities may be without air travel as a result of the grounding.
“We could be on the cusp of fundamentally changing the air transportation system in the United States,” said Faye Malarkey Black, the CEO of the Regional Airline Association. “History says once a city loses service, it doesn’t come back. These are the first shutdowns, but if we don’t get the help, and get it fast, this definitely won’t be the last.”
Source: forbes.com
