Apr 17, 2020 - Economy & Business

Airlines face a long, slow climb despite federal coronavirus rescue

Photo: David McNew/Getty Images

Congress' $50 billion rescue package for U.S. airlines will help keep the carriers alive — and their employees on the payroll amid the coronavirus crisis — until the end of September. After that, the outlook is grim.

What's happening: The airline industry is reeling, with air travel down as much as 95% since the coronavirus stopped Americans in their places in mid-March. Even as a hopeful President Trump begins to prepare for the reopening of the U.S. economy, it will likely be years before airlines bounce back to pre-crisis levels.

Look at what happened after 9/11, notes the Wall Street Journal.

  • U.S. airlines' domestic revenues didn't fully recover until 2004, three years after the terrorist attacks.
  • International flights, hurt by the SARS epidemic in 2003, lagged for almost another year.

Now, economists say we're in for a deep recession, far worse than 9/11 or 2008-2009.

Driving the news: Earlier this week 10 U.S. airlines agreed to terms with the U.S. Treasury to distribute $25 billion in payroll assistance as part of Congress' $2.2 trillion federal stimulus package.

  • Another $25 billion in government loans is available, and some, including American Airlines, intend to apply.
  • Taxpayers could wind up with small stakes in each of the airlines if the Treasury Department exercises equity warrants under terms of the deal.

The government lifeline comes with other strings, too: airlines must maintain service to all of the markets they served before the crisis, even though there are hardly any passengers.

United offered a sobering assessment this week in a letter to employees from CEO Oscar Munoz and President J. Scott Kirby.

What's next: When demand does start to improve, it likely will not bounce back quickly, they said.

  • Lingering health concerns mean people could still be afraid to fly.
  • Not all states and cities are expected to re-open at the same time, and some international travel restrictions will likely remain in place.
  • Large conferences and events will likely remain on hold for a while.

Go deeper

24 hours ago - Sports

How coronavirus could reshuffle the sports calendar

Illustration: Eniola Odetunde/Axios

The NBA's Board of Governors approved Thursday the league's 22-team plan to resume play at Walt Disney World — a plan that also includes tentative dates for both this season and next.

Why it matters: The league's proposed trip to Disney World not only impacts this season but could have a domino effect that impacts seasons in the future — and could permanently change what time of year the NBA plays its games.

Trump's week of viral quicksand

Data: NewsWhip; Chart: Andrew Witherspoon/Axios

Stories about President Trump's photo op at St. John's church after peaceful protesters were forcefully cleared from the area averaged the most online attention of any issue about the president this week.

Why it matters: Trump's force-over-compassion approach to the demonstrators protesting the murder of George Floyd had Republican allies backpedaling to keep a distance — and led to a wave of condemnations that got plenty of online traction on their own.

Biden formally secures Democratic presidential nomination

Joe Biden speaks at Delaware State University's student cente on June 5. Photo: Jim Watson/AFP via Getty Images

Former Vice President Joe Biden became the formal Democratic presidential nominee on Friday evening, per AP.

The big picture: Biden has been the presumptive frontrunner to take on President Trump since Sen. Bernie Sanders suspended his campaign in early April.