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US airlines 'fighting for survival' with no hope of V-shaped recovery, trade group says

Sept. 03, 2020
3 min read
US airlines 'fighting for survival' with no hope of V-shaped recovery, trade group says
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There is near unanimous agreement that the coronavirus pandemic has pushed the airline industry into one of the toughest crises in a century of flying.

While World War II temporarily halted most passenger air service around the world, the more recent tests of 9/11 and the Great Recession were never as bad as the situation is today — eight months into the coronavirus pandemic. The number of people boarding flights operated by U.S. airlines — while up from the bottom in April — remains down 70% year-over-year, and carriers continue to lose millions of dollars daily even after taking a scalpel to costs.

“Right now, we’re fighting for survival. No bones about it," trade group Airlines for America (A4A) president and CEO Nicholas Calio said during a media briefing on Thursday.

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While no major U.S. airline appears on the edge of a bankruptcy filing, every carrier has racked up significant debt while trying to bolster their balance sheets to get through the crisis. But how long it takes to beat COVID-19 will make a big difference in how the industry shakes out.

In an Aug. 30 report, analysts at Raymond James estimated that major U.S. airlines have enough cash to weather the crisis through the middle of 2022 barring no further travel recovery. However, the amount varies for individual airlines. American Airlines is sitting on only enough cash to get it to next May while Southwest Airlines could fly through August 2022.

Several regional carriers, including ExpressJet Airlines, RavnAir in Alaska, and Trans States Airlines, have already been forced to close — or soon will — their doors because of the pandemic.

Related: Global air travel unlikely to recover until 2024 as COVID remains ‘issue’ in US, elsewhere

"People talk about a V-shaped recovery — the airline industry has never seen a V-shaped recovery," Calio said. "We believe, if things go well, it will be 2024 before demand is where it was.”

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A4A's forecast matches that of the International Air Transport Association (IATA), which also anticipates four-year return to pre-pandemic global flying levels.

A4A continues to push for Congress to pass additional payroll support for airlines. If included in a new federal coronavirus aid package, the funds would allow airlines to keep staff on their payrolls through March — forestalling tens-of-thousands of furloughs when the current CARES Act protections expire on Sept. 30.

Related: Should Congress dole out more money for airline employees?

The lobbying effort is led by 13 labor unions, including the Airline Pilots Association (ALPA) and Association of Flight Attendants-CWA (AFA), and backed by every major airline.

Calio describes the additional payroll funds as "aid" and not a "bailout" as they would only cover staff expenses and airlines would have to pay back at least a third of the money.

Related: Flight attendants will make up majority of United’s 16,000 employee furloughs

Featured image by Getty Images

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Best card for premium perks while traveling
TPG Editor‘s Rating
Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
4 / 5
Go to review

Rewards Rate

10XEarn unlimited 10X miles on hotels and rental cars booked through Capital One Travel
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  • Intro Offer
    Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel

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  • Recommended Credit
    Credit ranges are a variation of FICO© Score 8, one of many types of credit scores lenders may use when considering your credit card application.

    740-850
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Why We Chose It

The Capital One Venture X card is one of the best all-round travel credit cards ever launched. Not only is it offering a tremendous welcome bonus, but cardholders can earn tons of miles on everyday spending and receive a 10,000-mile anniversary bonus to boot. Its annual fee is $395, but cardholders can count on up to $300 in statement credits toward travel booked through Capital One Travel each year and other valuable benefits like access to Priority Pass lounges and Capital One’s own growing family of airport lounges.

Pros

  • Excellent welcome offer worth 75,000 miles after you spend $4,000 on purchases in the first three months.
  • Up to $300 in annual travel statement credits toward bookings make through Capital One Travel.
  • 10,000 bonus miles (worth $100 toward travel) each account anniversary.

Cons

  • The $395 annual fee might be expensive for some, but this card’s benefits provide much more value than that.
  • If you don’t travel frequently, this might not be the best card for you.
  • Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel
  • Receive up to $300 back annually as statement credits for bookings through Capital One Travel, where you'll get Capital One's best prices on thousands of options
  • Get 10,000 bonus miles (equal to $100 towards travel) every year, starting on your first anniversary
  • Earn unlimited 10X miles on hotels and rental cars booked through Capital One Travel and 5X miles on flights booked through Capital One Travel
  • Earn unlimited 2X miles on all other purchases
  • Unlimited complimentary access for you and two guests to 1,400+ lounges, including Capital One Lounges and our Partner Lounge Network
  • Receive up to a $100 credit for Global Entry or TSA PreCheck®
  • Use your Venture X miles to easily cover travel expenses, including flights, hotels, rental cars and more—you can even transfer your miles to your choice of 15+ travel loyalty programs
  • Named editors' choice for "Best New Credit Card of 2021" by The Points Guy
  • Earn 10 miles per dollar when you book on Turo, the world's largest car sharing marketplace, through May 16, 2023