Airlines Seek $50 Billion in Government Aid Amid Coronavirus Crisis -- Update

By Alison Sider in Chicago and Ted Mann in Washington 

U.S. airlines are in talks with the government to obtain at least $50 billion in financial assistance -- more than three times the size of the industry's bailout after the Sept. 11 attacks -- according to people briefed on the discussions.

The exact form and amount of aid carriers are seeking is under discussion, and could include government-backed loans, cash grants or other measures including relief from taxes and fees, according to some of the people and a proposal released by an airline trade group Monday.

Airlines have been stunned by the rapid plunge in their bookings as the novel coronavirus has spread around the world. As the worst-case scenarios they envisioned just days or weeks ago have come to pass, carriers have scrambled to make ever deeper cuts to their schedules.

Senior leaders at plane maker Boeing Co., meanwhile, have been in talks with congressional and Trump administration officials about potential financial assistance for the manufacturer and its suppliers, as part of a broader aid package for the aviation industry, a company executive said Monday.

"We can get the aviation sector back on its feet faster if there is assistance," the executive said. Details of any potential request for assistance couldn't immediately be learned.

Boeing continues to build wide-body aircraft at its Everett, Wash., factory near Seattle, while production of the narrow-body 737 MAX remains halted amid a protracted grounding following two deadly crashes.

"We want to protect our employees and we'd prefer not to go to layoffs," the Boeing executive said. The MAX crisis has already strained the aerospace giant's finances, but Boeing has said it aimed to avoid layoffs as aviation officials weigh returning that plane to service.

United Airlines Holdings Inc. said Sunday night it would cut its planned flying in half in April and May and is in talks with its unions about steps that could include furloughs, pay cuts or other measures to reduce payroll expenses.

Delta Air Lines Inc. and American Airlines Group Inc. have also announced severe cuts in flying, hiring freezes and voluntary unpaid leave for employees. All three carriers have disclosed that they are in talks with the government, but the amount of assistance being discussed hasn't been previously reported.

Airlines for America, the industry trade group, issued a proposal Monday for $50 billion in aid that it had circulated privately in recent days.

The trade group argued that half of the assistance should come in the form of direct grants to airlines.

The proposal also outlines a $25 billion program in which the Federal Reserve would purchase financial instruments from, or provide interest-free loans or loan guarantees to, passenger and cargo carriers.

It also includes provisions for rebates of excise taxes -- including those on tickets, cargo and fuel -- that airlines paid in the first quarter and a repeal of those taxes through at least Dec. 31 2021.

But some lobbying on behalf of the airlines believe that figure might not be enough, given the likelihood that the disruption to air travel will last for months, leaving carriers with huge debt loads and depressed cash flows.

"They might be shooting too low," one person involved in the talks said.

The Trump administration is using the post-Sept. 11 bailout passed by Congress in 2001 as a template for the talks with carriers, people involved in the discussions said.

Lawmakers in 2001 made $5 billion in direct payments to airlines after the terrorist attacks that prompted a three-day closure of North American airspace. They also earmarked up to $10 billion to support U.S. airlines through a loan program, though only $1.56 billion in guarantees were authorized, including to carriers that ended up failing.

"We don't see the airlines failing, but if they get into a cash crunch we're going to try to help them," National Economic Council Director Larry Kudlow told reporters at the White House on Monday. Mr. Kudlow said "lots" of airlines had reached out seeking assistance.

"We're in touch about their balance sheets and their cash flow," he said.

--Andrew Tangel and Doug Cameron contributed to this article.

Write to Alison Sider at [e-mail] and Ted Mann at [e-mail]

(END) Dow Jones Newswires

March 16, 2020 15:12 ET (19:12 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.