U.S. airlines warn on travel recovery while awaiting fresh aid

(Reuters) – Major U.S. airlines warned on Wednesday that travel demand will continue to languish until there is a widespread COVID-19 vaccine, while awaiting developments in Washington on additional federal aid.

U.S. airlines received $25 billion in payroll grants under the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March and have been lobbying for a six-month extension to protect tens of thousands of jobs at risk when the first round expires this month.

Union leaders met with senior congressional Democrats to discuss aid after a proposal from the Republican-led U.S. Senate on Tuesday for additional coronavirus relief did not include new government assistance for U.S. airlines or airports.

Republicans and Democrats have been jockeying for months over the next phase of coronavirus aid. Officials expect discussions to accelerate in the coming weeks, though it was not clear whether an agreement would be reached before the first $25 billion runs out this month.

Airlines continue to suffer a drastic downturn in demand due to the coronavirus pandemic, with the largest carriers each burning through around $1 billion of cash monthly.

The sector does not expect a meaningful recovery until there is a widely accepted COVID-19 treatment or vaccine, which could stimulate pent-up demand and the need for trained workers.

In a filing, United Airlines forecast a bigger drop in third-quarter passenger revenue than its previous expectation, but said it is adding new non-stop flights to Africa, India and Hawaii next year.

United also said it had reached an agreement in principle with its pilots union that could avert job losses for up to 2,850 pilots.

American Airlines told an online conference it could apply for more Treasury loans if other airlines do not take their share of a separate $25 billion available under the CARES Act.

Southwest Airlines, for example, has already said it is not applying for the government loans.

American, with the largest debt load of its peers, is also discussing with Boeing Co deferring the delivery of 18 737 MAX jets and eyeing other options to restore its balance sheet, Chief Financial Officer Derek Kerr said at an industry conference that was held virtually.

American’s shares lost 4%.

Speaking at the same conference, Delta Chief Financial Officer Paul Jacobson warned that any coronavirus vaccine must be followed by broad vaccinations, a process he said could take between six and 12 months.

The global race for a coronavirus vaccine suffered a setback on Wednesday when AstraZeneca Plc suspended its global trials after an unexplained illness in a participant.

Reporting and photo: Reuters

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