U.S. airlines have asked the U.S. government for $50 billion in assistance, citing continued negative pressure from COVID-19.
As reported by CNBC, Airlines For America, the lobbying arm of the major U.S. passenger and cargo airlines, has asked the U.S. government for $50 billion in assistance, which would include a “mix of direct aid and loan guarantees”.
Airlines For America said:
“In the short space of two weeks, U.S. airlines have seen their positions of strong financial health deteriorate remarkably rapidly. The downturn in demand for commercial air transportation related to COVID-19 is causing unprecedented harm to the U.S. airline industry.”
U.S. carriers are in need of immediate assistance as the current economic environment is simply not sustainable. This is compounded by the fact that the crisis does not appear to have an end in sight. In order to combat this unprecedented economic downfall, A4A is recommending the following combination of programs to provide immediate and medium to long-term assistance to the U.S. airline industry and protect their employees: 1) grants; 2) loans; and 3) tax relief.”
Here’s the specific proposal (.pdf).
Specially, the request includes:
- $25 billion grant for commercial airlines
- $25 billion “liquidity facility program” (unsecured loan) for commercial airlines
- $4 billion for cargo airlines
- Refund of federal excise tax for January 1 – March 31, 2020
- Suspension of federal excise tax until December 31, 2021
CONCLUSION
That’s quite a request…
As for whether it is deserved, I tend to take the same position as One Mile at a Time.
Is this a reasonable request by the U.S. airlines?
I do not support any bailout using taxpayer money for US airlines. As recent as Feb 21, United raised its checked bag fees…again! Its cancellation policies during the last few weeks are despicable. American Airlines has been no better. Both the airlines have been very profitable and instead of saving for a rainy day, they have spent that money lavishly on themselves (bonuses, insane executive-level payouts, non-strategic expansion, picking fights with other global carriers etc). If you are operating a business, you need to keep reserves for unforeseen circumstances.
Taxpayer money is NOT your cash reserve. If that is the case, stop being a private airline and become a nationalized airline. Capitalism does not apply only when you are profitable. It applies when you make a loss too. If they want taxpayer money, take a loan from the Federal Government/State Governments at a discounted interest rate. No bailouts. If you take taxpayer money, pay it back.
No bailout using taxpayer money to US airlines because they have sacrificed Conscience under the guise of Capitalism.
Are you kidding?
They should give a convertible preferred offering with an onerous dividend rate to the government. Dilute the shareholders massively.
Capital needs to be destroyed.
Sorry meant convertible bond offering.
No discounted rate government loans.
+1. Well said.
How is American going to payback the government and it’s current creditors? Isn’t that just stacking more debt on debt?
Republicans. Enough said.
Do you guys believe this fake news?
https://www.cnn.com/2020/03/16/africa/jack-ma-donate-masks-coronavirus-africa/index.html
The question is why is the billionaire trump missing from charity? Either he is not a billionaire or he is a real asshole. My money is on both.
The american Republican billionaires missing from charity.
In general, state aid should be discouraged unless the consequences of failure of the airlines threaten the well being or security of a nation. It shouldn’t be decided based on if I hate United or if I like Alaska or whatever airline.
A lot of companies and people are hurting. Just because Acme Motel or Joe Smith MD Dermatologists or Yummy Steakhouse are not nationally known (names made up), doesn’t mean they are less deserving than AA or DL.
Joe Smith MD was making $450,000 a year for the last 10 years. He should have reserves to run his clinic for a year with zero cash flow.
Airlines fail, tourism fails. It’s the ripple down effect.
I think that the questions of whether or not the airlines deserve to be bailed out (in whatever fashion that happens) by the federal government or it is reasonable that they should be is less important than whether or not it is worth it to taxpayers to do so. And I can see good arguments to either effect.
But, Matthew, I notice that neither you nor One Mile at a Time actually answered any of those questions. 😉
Government assistance? Funny, last time I checked it was my and your money.
I have run a small business that is a two-generational firm that has lasted 50-years. Still family run. I have been running it since the early 90’s
I survived Recessions.
I survived the stock market crash of 1997.
I survived 9/11.
I survived the 2008 Financial Crisis.
We never laid off a single employee. We always provided fully paid health benefits and 401K. We treat our staff well, though small (under 50). We give back to our unique industry and customer base daily.
Never have I asked for a bailout. I would not even know how to get one. We rely on banks who pretend to love you but run scared the second things get sketchy.
Through it we have survived. Yes, we had to get creative. Yes, the owners needed to make sacrifices. Yes, it was hard and, in the case of 2008, I still live with a certain mild PTSD of the sleepless nights experienced and a feeling as if I was duct taping a breaking dam. But we got through. What doesn’t kill you…..
This time? I am not so sure. If 2008 was a perfect storm – this is perfect storm with no forecast, no end in sight, and no leadership. Worst of all, an enemy that has no predictable behavior.
So you ask if airlines should get a bailout? No. It’s time that those of us in the trenches of small business are offered a level playing field where our work is rewarded with the same rules as everyone else.
I say let them burn. Let them learn. And let them start over and survive the hard way like the rest of us. Maybe they will appreciate their customers and employees a bit more. Maybe they will find the reward in that we are all in this together, that we are not in this to provide them winter ski homes in Aspen because they got greedy.
Will it cause pain to infrastructure? Sure. Will people lose their jobs, yes. That pains me. But I think it will be a valuable lesson in our country. I would hope it might actually provide some respect at last to small business owners who are constantly shoved aside in every crisis. And bring back a respect for the idea that one does not need to build empires. Just build a great business that finds a niche, takes care of its employees, and respects its customers.
The nail is in pain from getting hit on the head!!!
Pretty bold request after accusing middle east airlines is not competing fair due to assistance from their respective government. Oh well…. American logic it seems….
Me thinks they should take that $50 billion and provide support for the people who are unable to make ends meet during this crisis. There are plenty of people, I imagine, who have been laid off or who will be laid off, especially in the airline industry.
But then again, I’m getting ahead of myself. Those people don’t have the means of bribing their government officials.
a $25bn “grant” is out of the question. Structure the entire $50bn as a secured loan, give them the breaks on the excise tax (which must be passed on to us), and they have a deal.
Domestic airlines have been raking in the dollars for years now. What have they been doing with it?!?!!? Trump is an idiot so my bet the airlines will be receiving grants that they don’t deserve.
Trump is not an idiot. A complete sociopathic piece of crap but not an idiot.
He will have money for his hotels and golf courses in that bailout. Let’s hope his supporters will feel happy for him while they die penniless and in pain.
If we give a bailout we should get something for it. How about they eliminate bag and seat fees?
NO BAILOUTS TO THE GREEDY, COMMERCIAL AIRLINES! Look, following 9/11/01, Uncle Sam saved United and American Airlines from being sued out of existence, by establishing a victims compensation fund. Essentially, Uncle Sam bought off the families of the victims, and offered them money, on the condition that they would not sue the airlines. As a result, not one lawsuit for the security failures of the airlines ever went forward. Now, nearly nineteen years later, the airline industry has the gall to again come to Uncle Sam looking for a handout, again. S— is what we should give them for their abusive and arrogant employees, their planes which until very recently were not cleaned very well, their gouging the consumers at every opportunity, their squeezing in passengers like sardines, their overpaid and pompous executives who could care less about their employees or the comfort of airline passengers, their lousy schedules, their cancelling of flights and not notifying passengers, their skimping on aircraft maintenance, and choosing to pay FAA fines, rather than to address safety issues expeditiously, and last, but certainly not least, their habit of not taking consumer complaints seriously, and not reprimanding, suspending or firing employees who harass and abuse airline passengers. Uncle Sam has a serious deficit, and has other pressing financial needs. Therefore, let the airlines sink or swim!
Now Boeing is asking for 70 billion bailout. All these companies were buying their stock instead of saving money. Too bad Americans are dumb as rocks to comprehend but this is theft that is occurring. No other words. Here is Elizabeth Warren proposal for bailout. Very sensible
These are the eight conditions she demands for any federal bailout cash to be released…
1. Companies must maintain their payrolls and use funds to keep people working or on payroll.
2. Companies must provide a $15 minimum wage as quickly as practicable but no later than one year of the national emergency declaration ending.
3. Companies are permanently prohibited from engaging in share repurchases.
4. Companies are prohibited from paying out dividends or executive bonuses while they are receiving any relief and for three years thereafter.
5. Companies must set aside at least one seat — but potentially two or more, as the amount of relief increases — on the board of directors for representatives elected by workers.
6. Collective bargaining agreements should remain in place and should not be reopened or renegotiated pursuant to this relief program.
7. Corporations must obtain shareholder and board approval for all political expenditures.
8. CEOs must be required to personally certify a company is compliance and face criminal penalties for violating these certifications.
US Airlines want a bailout, yet their unethical behavior continues: “United hides cheap flights from passengers affected by coronavirus” https://bookwithcarry.com/blog/united-cheap-flights-coronavirus
Why tax payers have bail them out every time? STOP giving CEO big payment of bonus and fund yourself for future situations.