American Airlines Seeks $12 Billion In Government Aid To Protect Jobs

Topline: American Airlines is seeking $12 billion in financial help from the U.S. government to tide it over for the next six months as the coronavirus pandemic continues to wreak havoc on the aviation industry.

• The world’s biggest airline by passenger numbers is seeking a tranche of the government’s $2 trillion COVID-19 economic relief fund, $50 billion of which was set aside for airlines and will be rolled out half in grants, and half in payroll loans.
• American is seeking support until September 30, when it hopes to be flying a full schedule, and is eligible for $6 billion in grants and $6 billion in loans under the scheme.
• The carrier said employees would not receive a cut in pay or benefits, nor would there be involuntary furloughs for the next six months as part of the loan.
• In an email to employees, reported by the BBC, chief executive Doug Parker and president Robert Isom said: “These funds are being distributed to ensure continuation of essential airline service and protect jobs.”
• They added: “We intend to apply for these funds and are confident that, along with our relatively high available cash position, they will allow us to fly through even the worst of potential future scenarios.”
• American has joined most major carriers in dramatically cutting back flights as measures to contain the spread of COVID-19 around the world have caused passenger demand to plummet.
• American Airlines shares were down almost 13% on Monday morning.

Additional info: American Airlines has cut its domestic flights by 60% in April, compared with last year, and 80% in May. It is also suspending 80% to 90% of international flights in the same period, it said last week.

Key background: The aviation industry has been one of the worst hit by the coronavirus crisis, with the International Air Transport Association (IATA) warning that passenger revenues are expected to be down $252 billion this year, compared to 2019.

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