Former JetBlue Chairman Joel Peterson on his outlook for the airline industry.
Despite the looming threat of furloughs for the airline industry set to begin at the end of this week, American Airlines CEO Doug Parker said Sunday that he is still hopeful Congress will reach an agreement on a new round of coronavirus stimulus that would provide aid to the nation’s air carriers.
“There’s enormous bipartisan support for it. We have Republicans, Democrats, the administration all saying — knowing that this is the right program, that it makes sense, that indeed it should be extended because airline employees provide critical infrastructure,” Parker told CBS’ Face the Nation. “We have everyone putting us in every bill they have, we just need the bills to be laws. We need laws, not bills. That’s what we’re going to do and I’m actually confident we can get it done.”
U.S. AIRLINES MAKE URGENT CALL FOR NEW BAILOUT AS JOB CUTS LOOM
Parker’s high hopes come as Congress has been at an impasse for over a month on additional stimulus, leading many airlines to seek out other alternatives to prepare for the worst as the $25 billion bailout from the federal government is set to expire on Oct 1, which is when airlines can begin to furlough employees.
American announced in a filing Friday that it has secured $5.5 billion in additional funding allotted under the CARES Act as it prepares to weather the pandemic without more stimulus, following a similar move by United. Meanwhile, competitor Delta Airlines said it would be turning down the CARES Act loan and mortgaging its frequent flier program, SkyMiles.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| UAL | UNITED AIRLINES HLDG. | 34.20 | +1.46 | +4.46% |
| DAL | DELTA AIR LINES INC. | 29.78 | +0.77 | +2.65% |
Without the new round of stimulus, however, Parker warned that roughly 100,000 aviation workers being furloughed across the industry is still inevitable, and that once those furloughs start, the ability to “continue to provide services needed to pull the economy back out of this is going to be severely hampered.”
While President Trump has floated using an executive order to help the airlines, Parker said he would prefer the longer-term solution that would come from legislation being passed by Congress.
“There’s certainly not much time left, but there’s enough time,” Parker said. “We just need them to come together and do what’s best for America and for our country and certainly for the airline business.”
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Parker’s call to action for a new stimulus deal comes as the struggling airline has seen “gradual improvement,” which he believes can be accelerated by lifting coronavirus-related restrictions.
“A vaccine certainly would be really helpful. But, you know in between there, having quarantines go away, having, you know, companies bring people back into the office, returning to work,” Parker said. “Those types of things have a huge impact on the need for air travel.”
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| AAL | AMERICAN AIRLINES GROUP INC. | 12.29 | +0.52 | +4.42% |
According to Parker, American’s revenue is expected to be down at about 75% in the third quarter and 65% in the fourth quarter.
