In a recent interview with the adn40 newscast, the CEO of Volaris, Enrique Beltranena, said that the Mexican ultra-low-cost airline…
How Aviation Fits Into the $2 Trillion U.S. Aid Package
In the early morning hours on March 25, the White House and Senate struck a deal on an aid package for U.S. businesses and consumers totaling $2 trillion. Even though it had not yet reached, the sweeping bill will make available hundreds of billions of dollars for businesses in need of bailouts.
One industry that has been among the hardest hit in recent weeks has been the commercial aviation industry. Airlines, in particular, have lost virtually all of their customer base in recent weeks.
With details of the deal beginning to surface in the morning hours Wednesday, NBC reported $25 billion in the form of grants had been set aside for airlines to be able to pay employees even as they operate a small fraction of their normal schedules. The bill will also come with another $4 billion for cargo carriers.
Further still, more specific information on the Senate’s stimulus package revealed a number of loans or loan guarantees, including $25 billion for passenger airlines and $4 billion for cargo operators. Moving beyond airlines, $10 billion will be made available for airports, and a further $3 billion will be set aside for airline and airport contractors.
As nations have closed their borders, some U.S. airlines have canceled upwards of 90 percent of their international traffic, choosing to operate a few select routes in order to simply keep those markets open.
Domestically, business and leisure travelers alike have dried up on the heels of shelter-in-place orders that are expected to cover approximately 40 percent of the U.S. population. For those not under the order, avoiding travel is one of the first steps most will take to avoid contracting and spreading the virus further.
According to OneMileAtATime, some of United’s busiest transcontinental routes reliably had load factors under 20 percent during normal peak travel hours Monday morning. Those figures came after the airline had already canceled hundreds of flights.
The news that aid was coming came on the heels of a Wall Street Journal report that was released earlier in the week that detailed the possibility that all domestic flights could be canceled, either by the airlines or government order.
On Monday, however, President Donald Trump upended that idea when he said he hoped to have many of the imposed restrictions lifted by Easter, which this year falls on April 12. While health officials have said that target is exceedingly optimistic, his desire for such a timeline will likely benefit airlines over a more prolonged approach.
Though aid has been secured for the time being, airlines still continue to cancel thousands of flights each day, with each of the three largest U.S. carriers having grounded a vast majority of their fleets. According to FlightStats, Wednesday will see over 9,600 flight cancelations across the U.S.
Boeing, of course, is the largest company on the other side of the commercial aviation crisis. As a manufacturer, it has seen future demand for its aircraft all but evaporate in recent weeks, which led the company to be at the forefront of the push for $60 billion in aid for the industry at large.
But while the company stopped production as its Seattle-area plants on Wednesday, it also announced that it hoped to restart production of its beleaguered 737 MAX aircraft in May after a months-long hiatus. Between that news and the emergence of the deal, the company has seen its stock price jump as investors have renewed hope for the future of Boeing and the entire U.S. commercial aviation industry.
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