Will a Government Bailout Resurrect the Airline Industry?


The struggling airline industry will get a $32 billion infusion as part of the $2 trillion congressional stimulus bill. But will it be enough to resurrect an industry that is one of the most essential for the economy?

“They’ve virtually stopped flying internationally and domestic schedules,” said John Pletz, a senior reporter for Crain’s Chicago Business who covers the airline industry. “Depending on who’s doing the math, flights are down 50% to 70%. We’re way beyond 9/11 territory, which I think was roughly a 15% to 17% drop in revenue for the airlines. For that year, aircraft was grounded for three days. … Best-case scenario that the airlines were hoping for was that they really sort of get back to flying towards the end of summer, late summer. And now, I think you’ve got a lot of folks wondering if it’s going to be far worse than that.”

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The bill reportedly will give passenger airlines $25 billion in grants. Cargo airlines will get $4 billion and contractors would get $3 billion. But there are conditions to get that money, including a stipulation that companies must refrain from “conducting involuntary furloughs or reducing pay rates and benefits” through Sept.  30, according to CNBC, which saw a draft of the Senate bill.

“We’re not on a trajectory that we have any sense of how quick travel is going to come back,” said Joseph Schwieterman, a DePaul University professor and the president of the Chicago Chapter of the Transportation Research Forum.

“The tough thing about this problem is that people aren’t going to feel safe flying for six months, eight months, because the specter of coronavirus will still be out there, even if the worst of the crisis is over,” he said. “It’s going to be financially just something like we haven’t seen before. So, unfortunately, this bailout really just gets them through perhaps June.”

In order to keep planes in the air in the meantime, some airlines are shifting from hauling passengers to hauling cargo, including American Airlines.

“American actually just announced we’re going to do some cargo on the flights to Europe, so that’s helping,” said Dennis Tajer, an American Airlines pilot and a spokesman for the Allied Pilots Association, the pilot’s union. “Everyone is looking outside the box to sustain the operation to assist our country through this crisis.”  

Airline stocks rose Wednesday, a continuation of Tuesday’s rebound as details of the stimulus were being hammered out. Delta Air Lines had the biggest bump, at 15.7%; Chicago-based United Airlines climbed 10.91%; American Airlines climbed 10.56%; and Southwest was up 4.62%.


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