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US extends US$14 billion lifeline to airlines in third government aid package

US extends US$14 billion lifeline to airlines in third government aid package

Travellers wearing protective face masks to prevent the spread of the coronavirus disease (COVID-19) reclaim their luggage at the airport in Denver, Colorado, on Nov 24, 2020. (Photo: REUTERS/Kevin Mohatt)

WASHINGTON: US lawmakers on Wednesday (Mar 10) gave final approval to a new US$14 billion payroll assistance package to US airlines as part of a COVID-19 relief bill, the third round of government support to the struggling sector since March 2019.

With the latest six-month extension that will keep thousands of workers on payrolls through Sep 30, Congress has awarded US airlines US$54 billion for payroll costs since March 2020.

US air passenger travel fell by 60 per cent in 2020 to the lowest level since 1984, down more than 550 million passengers. US passenger airlines are still collectively burning about US$150 million daily, and the cash bleed is expected to continue through most of this year as demand remains depressed.

Airlines for America, an industry trade group, praised the latest extension, saying it "is vital to have our employees on the job and ready to assist as our nation prepares to move forward from this crisis."

US airline shares have gained around 16 per cent over the past month as domestic travel trends improve amid vaccine rollouts.

The Transportation Security Administration screened over 1 million passengers on five of the first 10 days of March and analysts expect the numbers to increase heading into spring.

Some low-cost carriers focusing on domestic leisure travel are starting to hire again and say they could have managed without another bailout.

Overall US airlines have benefited from taxpayer help more than rivals in neighbouring regions like Canada, where the government has yet to extend an aid package for the industry, or in Latin America, where two large carriers filed for Chapter 11 protection due to COVID-19.

The US government last year also extended US$25 billion in low-cost loans to airlines. Of the payroll grants, US Treasury required larger airlines to repay 30per cent and award the government warrants.

Source: Reuters

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