COVID-19: US airlines burn USD 10bn monthly as traffic plunges

- A Monitor Desk Report 06 May, 2020 | 695 Views|-+
Dhaka: The airlines of the United States of America are collectively burning over USD 10 billion in cash per month and averaging fewer than two dozen passengers per domestic flight in the aftermath of COVID-19 outbreak, industry trade group Airlines for America (A4A) said in a prepared testimony at a US Senate hearing today.

Even after grounding more than 3,000 aircraft, or nearly 50 per cent of the active US fleet, the group said its member carriers, which include the four largest airlines of USA - American Airlines, Delta Airlines, Southwest Airlines and United Airlines - are averaging just 17 passengers per domestic flight and 29 passengers per international flight.

"The US airline industry will emerge from this crisis a mere shadow of what it was just three short months ago," Nicholas Calio, Chief Executive of A4A said, according to his prepared testimony.

Net booked passengers have fallen by nearly 100 per cent year-on-year, the testimony before the Senate Commerce Committee said. The group warned that if air carriers were to refund all tickets, including those purchased as nonrefundable or those cancelled by a passenger instead of the carrier, "this will result in negative cash balances that will lead to bankruptcy."

US airlines have cancelled hundreds of thousands of flights, including 80 per cent or more of scheduled flights into June as US passenger traffic has dropped by 95 per cent since March. They are conducting additional cleaning measures and requiring all passengers to wear facial coverings.

Calio said airlines "anticipate a long and difficult road ahead ... History has shown that air transport demand has never experienced a V-shaped recovery from a downturn."

The US Treasury has awarded nearly USD 25 billion in cash grants to airlines to help them meet payroll costs in exchange for them agreeing not to lay off workers through September 30. Major airlines have warned they will likely need to make additional cuts later this year to respond to a long-term decline in travel demand.

United Airlines said on May 4 that it plans to cut at least 3,450 management and administrative workers on October 1, or 30 per cent of those workers.

Also testified at the hearing on the state of the aviation sector was Eric Fanning, who heads the Aerospace Industries Association. He mentioned that Boeing Co said last week it will cut 16,000 jobs by the end of the year, while GE Aviation plans to cut up to 13,000 jobs and airplane supplier Spirit AeroSystems is cutting 1,450 jobs.

Also on Bangladesh Monitor