US airlines ‘fighting for survival’ with no hope of V-shaped recovery, trade group says
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.
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.
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.
“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.
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.
Featured image by Michael A. McCoy/Getty Images.
Welcome to The Points Guy!
WELCOME OFFER: Up to 100,000 bonus miles
TPG'S BONUS VALUATION*: $1,040
CARD HIGHLIGHTS: 3X miles on United® purchases
*Bonus value is an estimated value calculated by TPG and not the card issuer. View our latest valuations here.
- Earn 80K bonus miles after you spend $5,000 on purchases in the first 3 months your account is open. Plus, an additional 20K bonus miles after you spend $10,000 in the first 6 months
- $250 Annual Fee
- Earn 3X miles on United® purchases, 2X miles at restaurants, on select streaming services & all other travel, 1X on all other purchases
- Earn 3X miles on United Airlines purchases
- Earn 2X miles at restaurants and on select streaming services
- Earn 2X miles on all other travel
- Earn 1X mile on all other purchases
- Each year, receive a $125 credit on United® purchases and two 5k-mile anniversary award flight credits. Terms apply.