Things were looking up last month for the U.S. aviation industry. The pandemic curve was flattening and consumer demand was coming back stronger and quicker than anticipated. Then came the resurgence which continues even today. Listening to the warnings from the CEOs of JetBlue and Southwest, you’d really think the sky is falling…and maybe it actually is. But there’s also an election coming up…
JetBlue CEO Warns Of “Day Of Reckoning”
Speaking on CNBC, Hayes warned of a “day of reckoning” coming in October if another round of airline bailouts is not signed into law:
“As we get to the end of the first CARES Act period, through to September, we’re still going to be at a fraction of our normal levels. And so airlines are going to have to reset.”
Hayes, like United Airlines’ CEO Scott Kirby, is beating the war drums as pressure mounts for a second round of payroll support for beleaguered U.S. airlines.
“It has the potential to cause a significant amount of job losses in the industry and an extension of the CARES Act for the industry would prevent that.”
While Hayes sees light at the end of the tunnel, he fears the bridge necessary to reach that point:
“We all agree that we’ll see a recovery at some point. I think people instinctively want to travel. There’s a lot of pent-up demand for travel, lots of friends and families they put off seeing. The question is how do we bridge to that point.”
For Hayes, that bridge is taxpayer-funded payroll support.
Southwest CEO Says His Airlines Is In “Intensive Care”
To Texas, where CEO Gary Kelly asserts that his Southwest Airlines is in “intensive care.” While Southwest has thus-far promised there will be no furloughs regardless of whether a new federal assistance bill is passed, he issued a dire warning in a note to employees:
“Our Company is in intensive care. We’re losing roughly $20 million a day, and this massive and unprecedented amount of fresh cash is crucial to fund these losses. Without it, we run out of cash, and literally, shut down.”
One quarter of losses in 2020 wipes out a year of profits. Kelly, like all of us, is stymied by the uncertainty surrounding the pandemic:
“I know you all know, we are in the fight of our lives. It is now abundantly clear this will not be over this fall.”
And that’s the concerning thing…
Are Warnings From JetBlue And Southwest Just Electioneering?
Let’s also not forget both JetBlue and Southwest have lined up substantial funding already to weather this storm. But let’s also not forget we have a presidential election coming up in November.
No good opportunity must ever go to waste. Read my lips: no new taxes JetBlue and Southwest will find a way to survive, but why should they do it from their own pockets if they can get American taxpayers to pay for it instead? I’m being facetious, but one can hardly blame them for taking advantage of a crisis in the 100 days before an election. My prediction: a three-month extension through Christmas.
CONCLUSION
Get used to the tough words from JetBlue and Southwest. We’re going to be hearing a lot more from airline executives in the weeks ahead as desperation grows over a new round of federal funding.
image: Tomás Del Coro / Wikimedia Commons
This is situation for airlines is absolutely not electioneering. The industry has been decimated by the virus and load factors are thirty percent for most carriers. The number of aircraft flying is starkly different than August 2019.
To state this is electioneering is the most asinine statement.
This virus is a hoax to crash the economy on purpose. Both parties are in on it. The top 50 executives in these airlines that earn over 700k per year just in salary need to take a 35- 50% pay cut. If you earn 250k, you get cut to 150k, if your around 150k, you get cut to 100k. And 100k cut to 80k amd 75k cut to 60k.
Just like BA did in the UK, the airlines need to start suing states over their capricious and unenforceable quarantine policies, which do nothing to discourage rich people from traveling back and forth to Miami, but do scare the daylights out of regular Americans who might need to, say, travel from Texas to New York for a funeral.
Trump’s DoJ should start suing Chicago, DC, NY, NJ, CT, MA, and other states over their quarantine policies — and the airlines should do the same. Given these can’t be fairly enforced, they should all be *advisory* only.
Drop these crazy quarantine requirements and a lot of domestic aviation would recover. And it’s also the case that foreigners can’t confidently travel in a U.S. where all these quarantine requirements exist, so eliminating these — at least making them “advisory” — is a necessary prerequisite for restoring international aviation, especially trans-Atlantic.
These quarantines are useless and just about the “domestic” politics of certain states.
James – I disagree. Travel will be impacted well beyond the quarantine policies. Currently, the public is faced with a disinformaiton campaign along with many dire warnings from many media outlets – all of which makes people uncomfortable. Tack on an actual pandemic, which is what we have, and the feeling of many Americans is quite understandable. Quarantine policies do not drive behavior per se, they seem to be a defensive measure that I wish states did not need to put in place. Unit we see a coherent Federal response, which isn’t happening right now, this isn’t going to change. The vast majority of people will not travel until they see actual change and progress with this virus and suing individual states will not change this fact.
It would really help if I spell disinformation correctly. Apparently, not enough coffee today.
Your comments are correct less the one regarding the federal role and the state role. The state role is to establish individual plans for each state. The federal role is tasked with providing support and direction. The federal is to provide support coupled with direction. However each state develops and implements that plan with the federal supporting those plans.
@BSOD, there are many people who would take leisure travel to New York to see friends and family — or just spend time in the city — who aren’t right now because of Cuomo’s unconstitutional quarantine. Flying is perfectly safe. State governments are suppressing the aviation industry and they need to stop.
Wow! I haven’t read such a “wrong-headed” theory in a long time. Do you realize that your suggestion would endanger even more lives and increase deaths? Start with medical facts, then go from there. If the problem is with enforcement, then beef up enforcement for those situations where people are deliberately choosing to be irresponsible and putting others (and their own) lives at risk. Don’t give up and declare masks “unenforceable.” If people waste time by bringing frivolous lawsuits against the states that have taken a firm public health stand, the outcome won’t be better for businesses. It will worsen the spread of the virus, and businesses will have an even harder time surviving.
ABSOLUTELY CORRECT! And why are tax payers bailing out billion dollar companies when families who received their onebtimr lump sum pension in 2019 and never earned over the threshold in any year are not receiving stimulus bailouts due to a pension they used to pay off debts while entering into retirement.
@James, any suits by the airlines would lose pretrial for failure to state a cause of action. Compagnie Francaise de Navigation a Vapeur v. Louisiana Board of Health (18 US 380) clearly states it would require an act of Congress to overturn a state quarantine. So you think airlines spend hundreds of thousands of dollars on some sort of performative grievance? That’s just what businesses losing millions of dollars need to do.
Matthew, you attract the legally illiterate. I’m going to have to start charging these idiots.
I agree. The random mandates and mask policies are keeping many from wanting to fly. I have no desire to get on an airplane anytime soon because of the hassle involved. I can’t imagine anyone wanting to fly for leisure right now. Those that do fall into one of two camps. They either are so afraid for their life that they are willing to wear a mask on a plane for hours and shame people who don’t, which means they really shouldn’t leave their home. Or they are forced to wear a mask and put up with all the faux precautions which makes them not want to fly in the first place. Most airlines have picked which customers they want with the rules they have put into place.
What is happening in the US is pure and simple- irresponsible behavior by most of it’s citizens and a moronic administration. Many more will lose their lives and so will airlines as the economy continues to recover. Third World countries can rally their people during a pandemic, but not America? Who wants to sit in a plane for hours with infected people; is this your idea of a solution? DOJ? God help us all.
I’m not sure if it’s scarier that people actually reach these conclusions or if they’re just posing the story in such a way to get responses, but this author is pretty detached from the actual situation. Electioneering isn’t even a consideration – people are actually just not traveling, and it’s not due to laws or regulations, it’s related to a legitimate pandemic concern. Argue what you will about how merited the concerns are, but that won’t put the customer base back on planes. The industry is taking a hit. Period. And before any “handouts” were utilized, a series of other measures have been taken by the major airlines in the country, including voluntary employee separation packages, extended time off with partial pay, simply cutting projects and overhead costs that aren’t “essential”. You don’t have to take a side to see that articles like this are looking to spin things in most controversial angles they can think of.
Perhaps instead of “handouts” the airlines should exchange stock in the airline for taxpayer cash. Then the government can sell the stock later.
Dems and unions just trying to buy votes as usual, nothing more. If you’re not going to offer guaranteed employment to the 30M+ out of work outside the airline industry, why offer it to airline employees? Gosh, guaranteed employment, I wonder if that experiment has been tried before. Let’s also guarantee $1M salary to everyone, and we’ll all be rich! What could go wrong?
Guaranteed employment is alive and well in the U.S. it’s called working for the federal government.
They certainly are posturing to get more funding from the Feds which may not provide what they need. Sadly, some of these Airlines are going to have to shrink – which is a very tough reality. I am not sure the Feds are going to jump on the bandwagon this time, they can’t seem to decide what day of the week it is and there are other more pressing needs to deal with right. The Airlines might not get what they want this time.
I admire their hustle.
What would Herb say? What would Herb do? A few shots of Wild Turkey would put him squarely in the trenches of, “We have planes, we have people, but we have no demand…no problem!” He would sit down with every Union, every employee practically, and craft a plan. In the end, Herb would probably make WN stronger. He would see that the answer is often from the inside out. Rally your people and everyone else will follow.
Airlines are a commodity these days. There’s no good reason to give them $$, just so that they can fly empty planes. They had a great opportunity to stock up on cash for a rainy day in recent years and chose to do stock buybacks instead. FR and W6 are flush with cash and will come out stronger.
If the US airlines fail, it will provide an opportunity for new airlines to start.
Employees? Some have already left. Others will be let go and will go on unemployment.
How’s the job at jet blue working for you ??
How about bailing out the American people instead?!! Many Americans are jobless and teetering on the prospect of homelessness. And what about all the small business owners who have had to close due to mandates. The government needs to Stop bailing out billion dollar companies in corporate America and focus on helping the American people through this crisis.
Yea right..pay airlines whos been for years before covid19 in $Billions earnings, high cost travel tickets,been bail out by US governmentand now want you and me to save them with taxpayers money…ridiculous!
All of these airline executives cry poverty when their million dollar plus salaries are threatened. What have they contributed? What will they sacrifice? Well boys, I guess this is why you get paid the big bucks! Figure it out guys, and if you can’t, i guess it’s Bon Voyage’ to you and your over paid positions!!
Thanks for that Brian, right on!
Perhaps instead of “handouts” the airlines should exchange stock in the airline for taxpayer cash. Then the government can sell the stock later.
Cap the sum of salaries, bonuses, stock options, etc., at $250,000 until the money is repaid.