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

Sep 3, 2020

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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.”

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 Michael A. McCoy/Getty Images.

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