American airlines, overwhelmed by the collapse in air traffic since the start of the pandemic, will receive a new lifeline with Joe Biden’s economic stimulus package and begin to prepare for a resumption of traffic.
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The $ 1.9 trillion plan, finally approved by Congress on Wednesday, provides $ 14 billion for airlines. In return, they pledged not to fire anyone by October.
This third wave of massive support for the sector should allow them to keep their heads above water while airline ticket sales really start to rise again.
United Airlines and American Airlines, which warned in early February that they could lay off up to 27,000 people if aid was not extended after April 1, withdrew the threat shortly after the vote.
Their situation remains difficult. Companies carrying passengers lost a total of $ 35 billion in 2020, according to the industry federation Airlines for America (A4A).
To cope with the crisis, they have already cut their expenses significantly, since the withdrawal of the oldest aircraft – and therefore the most fuel-intensive – from their fleet to the many voluntary departure plans, through a reduced offer of drinks and snacks on board.
But even with government help, the companies collectively still burn $ 150 million every day.
They had to go into massive debt, like American Airlines, which announced on Monday that it wanted to raise an additional $ 7.5 billion on the markets, offering its loyalty program as a guarantee.
According to the A4A, their debt increased 56% in 2020 to reach $ 164 billion.
Vaccines and spring
Passenger numbers are still nearly 60% below pre-pandemic levels. And scalded by the surges in demand in the summer and during the holidays last year which quickly evaporated, the companies all recognized that the recovery would be choppy.
But they are banking on the deployment of vaccination and envy among consumers, after a year of restrictions, relaxation and warmer temperatures.
According to trends on Google, the number of searches for Southwest and United Airlines has increased 56% and 30% since Christmas, noted Jessica Rabe of DataTrek.
“Americans are getting more interested in travel as spring break approaches,” she concludes. “Leisure activities tend to return faster and stronger after a recession than business travel, and consumer aid (provided for in the economic recovery plan, Editor’s note) should contribute to the recovery.”
Southwest has already said it saw in February “an improvement in demand and bookings for leisure travel.”
“With this virus, we can prepare, but we can hardly anticipate well,” said Nicholas Calio, director of A4A, during a congressional hearing in early March.
Airlines could end up with “excess” seats this summer if demand disappoints, he warned. At the earliest, he said, the number of passengers will return to pre-pandemic levels in 2023 or 2024.
Survive and thrive
Without being able to count on lucrative business trips, still far from recovering, companies are adapting.
JetBlue has added flights to Miami and Key West in Florida or Los Cabos in Mexico, popular tourist destinations. To reassure passengers, Delta extended the blocking of the middle seats until the end of April. Several of them have eliminated the costs of canceling or changing flights.
Others are placing new orders to be ready to line up planes when traffic returns.
United Airlines has ordered 25 additional Boeing 737 MAXs, according to its director of operations Andrew Nocella, “not only to survive the crisis, but also to prosper”.
As a sign of this optimism, Boeing announced on Tuesday that it recorded more aircraft orders in February than cancellations for the first time since November 2019.