US: Airlines eye job cuts once bailout strings expire
The Trump administration’s bailout of US airlines is seeing the US Treasury taking just a nominal equity interest in return for grants and low-interest loans, attracting criticism it has been too generous to the companies’ shareholders. Terms of the deal explicitly prevent executives from quickly launching the painful restructuring other countries’ airlines are already doing, as they fight to survive in a world of much restricted air travel. “This was a so-called bailout that required the CEOs to run their airlines in a way that no free market CEO who didn’t have the government aid would ever do,” said one of the bankers involved in negotiations between the Treasury and the airlines. So far 93 US airlines have secured $12.4b of an available $25b in government funding for payrolls, each getting 70% in the form of grants that do not have to be repaid. As well as curbing share buybacks and executive pay, companies that took the money agreed not to lay off staff or axe routes until September 30 — even though air passenger volumes in the US have fallen by more than 90% since March, and a V-shape recovery is no longer in the cards. European carriers have announced waves of cuts but US airlines are still at the planning stage. United’s incoming CE, Scott Kirby, said he would cut cash burn from $40m a day now towards $30m a day in Q3 and then $20m a day in Q4, if travel has not rebounded. “The difference between that third-quarter number and that fourth-quarter number is really about employees,” he told investors earlier this month.<br/>
https://portal.staralliance.com/cms/news/hot-topics/2020-05-15/general/us-airlines-eye-job-cuts-once-bailout-strings-expire
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US: Airlines eye job cuts once bailout strings expire
The Trump administration’s bailout of US airlines is seeing the US Treasury taking just a nominal equity interest in return for grants and low-interest loans, attracting criticism it has been too generous to the companies’ shareholders. Terms of the deal explicitly prevent executives from quickly launching the painful restructuring other countries’ airlines are already doing, as they fight to survive in a world of much restricted air travel. “This was a so-called bailout that required the CEOs to run their airlines in a way that no free market CEO who didn’t have the government aid would ever do,” said one of the bankers involved in negotiations between the Treasury and the airlines. So far 93 US airlines have secured $12.4b of an available $25b in government funding for payrolls, each getting 70% in the form of grants that do not have to be repaid. As well as curbing share buybacks and executive pay, companies that took the money agreed not to lay off staff or axe routes until September 30 — even though air passenger volumes in the US have fallen by more than 90% since March, and a V-shape recovery is no longer in the cards. European carriers have announced waves of cuts but US airlines are still at the planning stage. United’s incoming CE, Scott Kirby, said he would cut cash burn from $40m a day now towards $30m a day in Q3 and then $20m a day in Q4, if travel has not rebounded. “The difference between that third-quarter number and that fourth-quarter number is really about employees,” he told investors earlier this month.<br/>
