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Airlines Get Their Bailout as Senate Agrees to $2 Trillion Stimulus Package

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The beleaguered airline industry will get its $58 million bailout after the U.S. Senate agreed overnight to a $2 trillion stimulus package to aid a domestic economy ravaged by the coronavirus pandemic.

The news caps an extraordinary week of partisan wrangling over elements in the package as the virus seemingly grows in strength. Gov. Andrew Cuomo of New York, now the epicenter of the pandemic in the U.S., said Tuesday that the number of coronavirus cases in his state is doubling every three days.

The Senate will officially vote on the package later today, Wednesday, March 25. Details are vague at the moment, but according to CNN, the proposal is said to include $250 billion set aside for direct payments to individuals and families, $350 billion in small business loans, $250 billion in unemployment insurance benefits and $500 billion in loans for distressed companies.

Included in that $500 billion is $50 billion for the struggling airline industry and $8 billion for cargo airline, settling the debate over whether the carriers deserved a bailout after spending 96 percent of its cash over the past 10 years on stock buybacks to bolster its shares and pay dividends to shareholders.

Whether or not that $50 billion is all in loans remains to be seen. The airlines were hoping half the total would come in the form of grants that they wouldn’t have to pay back.

It is also unknown whether any strings are attached to the loans, as critics have called for the airlines to eliminate ancillary fees, freeze CEO bonuses and promise not to lay off employees during the crisis.

Cruise lines and hotels are also expected to receive a portion of the stimulus, and all travel-related businesses will have to go before a Congressional hearing to lobby for their worthiness for such loans.

This is a developing story that will be updated during the course of the day.

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Airline News

Airline Travel Hits a 10-Year Low

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Saying that demand for air travel is declining at a rate quicker than airlines are even trimming capacity, the Transportation Security Administration (TSA) says traveling by plane has hit a 10-year low.

As the spread of the coronavirus continues to play havoc with everyday life, airlines are feeling the brunt and trimming flight schedules nearly every day. In fact, with the apex of the virus approaching for New York City, United just announced it is dramatically cutting back service in and out of NYC-area airports.

According to the TSA, airport security checkpoints screened fewer than 125,000 people nationwide on Thursday, April 2. That’s less than 5 percent of the 2.4 million people, including both passengers and crew members, who passed through TSA checkpoints on the same day last year.

Overall, the TSA reported that passenger counts are down about 92 percent – and “passenger traffic is falling much faster than they [airlines] can cut capacity.” In March, TSA screened just under half of the passengers it did in March 2019.

Airlines must continue to keep a minimum of flights and move cargo, as per government provisions of the bailout that was part of the stimulus package.

CNN reported that as a result of the drop in demand, about 20 percent of the US commercial aviation fleet – some 1,200 planes – are parked and have not been used in the last seven days, according to data from Airlines for America. Some airlines have decided to retire older aircraft ahead of schedule.

This post was published by our news partner: TravelPulse.com | Article Source

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