American, Southwest Airlines CEOs differ on plans for $50B aid package

Mar 27, 2020

This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. Terms apply to the offers listed on this page. For an explanation of our Advertising Policy, visit this page.

The leaders of American Airlines and Southwest Airlines have taken different views on the $50 billion aid package aimed at bridging the industry through the novel coronavirus pandemic working its way through the halls of Washington.

American CEO Doug Parker sees the aid coupled with the airline’s existing liquidity — or cash — as enough funds for the nation’s largest airline “to ride through the worst of potential future scenarios,” he said in a video message Thursday. While he cautioned that whether American qualifies for some of the funds is still up in the air, he believes that the carrier does.

Southwest CEO Gary Kelly took a slightly different track in his comments on the package in a video message  of his own on Thursday. He said the aid gives the Dallas-based carrier “another option” to bridge the crisis, something beyond the company’s access to loans and other credit lines. Kelly’s comment suggests that the airline is undecided as yet on whether to tap either the grants or loans.

Get Coronavirus travel updates. Stay on top of industry impacts, flight cancellations, and more.

The package that passed the Senate on Wednesday includes $25 billion in grants earmarked for employee compensation and benefits, and an equal amount in loans for airlines’ to continue operations. Both aspects of the deal come with strings, including maintaining current staffing levels until Sept. 30, and maintaining air service to all existing U.S. destinations.

Both Kelly and Parker cautioned that the aid package is not final yet. The House of Representatives is due to vote on it Friday, and then the president must sign it into law before funds can begin flowing.

The COVID-19 crisis has hit the travel industry hard. People are staying home amid the myriad of shelter-in-place orders around the country. Border restrictions have further diminished international travel as public health officials try to slow the spread of the virus.

Related: What you need to know about the $50B coronavirus aid package to airlines

Airlines have seen demand fall off a cliff amid the pandemic. American has already cancelled thousands of flights, and Parker said seats are only about 15% full on its planes that are still in the air.

On Friday, the Oneworld carrier said it will cut U.S. capacity by up to 80% in May and international capacity by up to 90%. The reductions include all of American’s service to Hawaii except one daily flight between Honolulu (HNL) and Los Angeles (LAX).

“I can assure that we’re losing money on every single flight, and big money,” said Kelly about his own airline. Southwest begins cancelling 1,500 flights, or nearly 38% of its entire schedule, on Friday.

Related: Southwest Airlines temporarily slashes Hawaii schedule as part of latest coronavirus cuts

The biggest threat to airlines in the crisis is a cash crunch as revenues dry up. The International Air Transport Association (IATA) has warned that more than half of global carriers could disappear — either shut their doors or merge with someone else — as a result of a lack of funds.

“This is 9/11, SARS and the Great Recession all rolled into one,” is how Delta Air Lines CEO Ed Bastian described the crisis to employees on March 25.

Watch both American and Southwest’s CEO video commentaries below.

Featured image courtesy of American Airlines.

Chase Sapphire Preferred® Card

WELCOME OFFER: 80,000 Points


CARD HIGHLIGHTS: 2X points on all travel and dining, points transferrable to over a dozen travel partners

*Bonus value is an estimated value calculated by TPG and not the card issuer. View our latest valuations here.

Apply Now
More Things to Know
  • Earn 80,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $1,000 when you redeem through Chase Ultimate Rewards®. Plus earn up to $50 in statement credits towards grocery store purchases within your first year of account opening.
  • Earn 2X points on dining including eligible delivery services, takeout and dining out and travel. Plus, earn 1 point per dollar spent on all other purchases.
  • Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards®. For example, 80,000 points are worth $1,000 toward travel.
  • With Pay Yourself Back℠, your points are worth 25% more during the current offer when you redeem them for statement credits against existing purchases in select, rotating categories.
  • Get unlimited deliveries with a $0 delivery fee and reduced service fees on eligible orders over $12 for a minimum of one year with DashPass, DoorDash's subscription service. Activate by 12/31/21.
  • Count on Trip Cancellation/Interruption Insurance, Auto Rental Collision Damage Waiver, Lost Luggage Insurance and more.
  • Get up to $60 back on an eligible Peloton Digital or All-Access Membership through 12/31/2021, and get full access to their workout library through the Peloton app, including cardio, running, strength, yoga, and more. Take classes using a phone, tablet, or TV. No fitness equipment is required.
Regular APR
15.99%-22.99% Variable
Annual Fee
Balance Transfer Fee
Either $5 or 5% of the amount of each transfer, whichever is greater.
Recommended Credit

Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.