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

Business

A Boeing 737 MAX of Brazilian airline Gol lands at Salgado Filho airport in Porto Alegre, Brazil on December 9, 2020. – More than 20 months after it was grounded following two deadly crashes, Boeing’s 737 MAX returned to the skies Wednesday with an incident-free commercial flight in Brazil, said AFP journalists on board. Low-cost airline Gol’s Flight 4104 from Sao Paulo arrived safely in the southern city of Porto Alegre about 70 minutes after take-off using the revamped jet, in a first that Boeing hopes will turn the page on a badly damaging crisis in the wake of the twin crashes. (Photo by SILVIO AVILA / AFP) (Photo by SILVIO AVILA/AFP via Getty Images)

WASHINGTON (Reuters) — U.S. lawmakers on Wednesday gave final approval to a new $14 billion payroll assistance package to U.S. 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 Sept 30, Congress has awarded U.S. airlines $54 billion for payroll costs since March 2020.

U.S. air passenger travel fell by 60% in 2020 to the lowest level since 1984, down more than 550 million passengers. U.S. passenger airlines are still collectively burning about $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.”

U.S. airline shares have gained around 16% 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 U.S. airlines have benefited from taxpayer help more than rivals in neighboring 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 U.S. government last year also extended $25 billion in low-cost loans to airlines. Of the payroll grants, U.S. Treasury required larger airlines to repay 30% and award the government warrants.

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