WASHINGTON/CHICAGO: Shares of major airlines fell on Tuesday after U.S. President Donald Trump said his administration would abandon talks with congressional Democrats over proposals to spend at least $1.6 trillion in additional coronavirus relief funds.
A key component was a new $25 billion bailout for U.S. passenger airlines to keep tens of thousands of workers on the job for another six months. A prior $25 billion airline payroll support program expired on Sept. 30.
American Airlines , whose shares had been trading higher, reversed course to close about 4.5% lower after Trump’s tweet on ending talks, while shares of United Airlines closed 3.6% lower. Southwest Airlines stock fell 2.4% and Delta Air Lines shares closed 2.9% lower.
American Airlines and United Airlines last week began laying off 32,000 workers, but had said they would reverse course if lawmakers reach a deal.
Airlines for America, the trade group representing major U.S. airlines, noted “thousands of airline workers across the country have already lost their jobs – and more furloughs are expected in the coming weeks.” But the group added “there is a glimmer of hope that our leaders in Washington will act and save these jobs before it’s too late.”
The U.S. Travel Association said “with millions of Americans suffering, it is woefully shortsighted to end relief negotiations” and added that “without immediate aid, 50% of all travel-supported jobs will be lost by December — an additional loss of 1.3 million jobs.”
Association of Flight Attendants-CWA International President Sara Nelson said “Trump issued one tweet to blow up the deal and leave millions of essential workers in freefall. Senate Republicans will own this cruel maneuver that puts our economy in a tailspin unless they demand COVID relief now.”
American Airlines said it will “continue to make the case in Washington that action is needed.”
U.S. airlines are collectively burning about $5 billion of cash a month as passenger traffic has stalled at around 30% of 2019 levels. After tapping capital markets, they say they have enough liquidity to last them at least 12 months at that rate.
Between voluntary and involuntary furloughs, major U.S. airlines’ workforce will shrink by at least 25% in October.
Industry experts expect a slight improvement in domestic demand over the winter holidays from current levels, but it will remain far below last year’s volumes. Meanwhile, higher-margin business and international travel remain severely depressed.
Chief executives acknowledge that pre-pandemic air travel demand is unlikely to return for years, and still unknown is how the pandemic, which has forced drastic changes in habits, will impact travel behavior.
American Airlines will end service to 11 smaller airports on Wednesday after Congress failed to approve additional aid.
Congress is expected to return to session on Oct. 19 and lawmakers may make a new attempt to pass a standalone measure to provide the $25 billion sought by airlines but the prospects are uncertain, even though the airline relief enjoys strong support in both the House and Senate. One remaining issue is how Congress would pay for the new funding, a senior congressional aide told Reuters Tuesday.
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