US airlines facing ‘Thelma and Louise’ moment as government aid set to expire
US airlines are facing what one leading analyst calls a “Thelma and Louise” moment as the industry approaches a government-funding deadline that could decide its future. On 30 September a government aid packages used to protect workers expires, the airlines have already announced huge layoffs but what comes next could be even worse. “I don’t think people get the Thelma and Louise analogy here. The car is up to speed, it’s headed toward the cliff and we know what happens next because you’ve seen the movie,” said industry analyst Robert Mann. Passenger numbers are down 70% and the loss of business and frequent flyer travelers has pushed revenue down by as as much as 85%. In March, airlines were offered two sources of money as part of the US government’s coronavirus stimulus package, the Cares Act. The act gave the industry $25b in loans to cover general costs and $25bn to keep workers on payroll. The payroll cash is made up of grants that don’t need to be paid back but the loans come with strings attached. Airlines will have to give the US government some equity stake in return for the loans. Some airlines, including American, Hawaiian Airlines and Spirit Airlines have agreed to take the cash. Others including Delta, United and Southwest, have yet to decide whether they will tap the loans. The situation is dire. Over the summer, American and Southwest both posted quarterly losses, with American dropping more than 86% to $1.6b from nearly $12b a year earlier. Southwest’s sales fell to $1bn, a drop of 83% from $5.9bn last year. With passengers avoiding airline travel over the peak summer months, conditions have barely improved. “Travel since March has been subsidized and the activity that is out there is 70% down and at fares 30% lower than they used to be,” said Mann. “There are no business travelers out there because companies have told them they’re under a travel ban, and if you do then don’t come back in the office.”<br/>
https://portal.staralliance.com/cms/news/hot-topics/2020-09-21/general/us-airlines-facing-2018thelma-and-louise2019-moment-as-government-aid-set-to-expire
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US airlines facing ‘Thelma and Louise’ moment as government aid set to expire
US airlines are facing what one leading analyst calls a “Thelma and Louise” moment as the industry approaches a government-funding deadline that could decide its future. On 30 September a government aid packages used to protect workers expires, the airlines have already announced huge layoffs but what comes next could be even worse. “I don’t think people get the Thelma and Louise analogy here. The car is up to speed, it’s headed toward the cliff and we know what happens next because you’ve seen the movie,” said industry analyst Robert Mann. Passenger numbers are down 70% and the loss of business and frequent flyer travelers has pushed revenue down by as as much as 85%. In March, airlines were offered two sources of money as part of the US government’s coronavirus stimulus package, the Cares Act. The act gave the industry $25b in loans to cover general costs and $25bn to keep workers on payroll. The payroll cash is made up of grants that don’t need to be paid back but the loans come with strings attached. Airlines will have to give the US government some equity stake in return for the loans. Some airlines, including American, Hawaiian Airlines and Spirit Airlines have agreed to take the cash. Others including Delta, United and Southwest, have yet to decide whether they will tap the loans. The situation is dire. Over the summer, American and Southwest both posted quarterly losses, with American dropping more than 86% to $1.6b from nearly $12b a year earlier. Southwest’s sales fell to $1bn, a drop of 83% from $5.9bn last year. With passengers avoiding airline travel over the peak summer months, conditions have barely improved. “Travel since March has been subsidized and the activity that is out there is 70% down and at fares 30% lower than they used to be,” said Mann. “There are no business travelers out there because companies have told them they’re under a travel ban, and if you do then don’t come back in the office.”<br/>
