Airlines Say Stimulus Not A Cure-All For Waning Demand

While appreciative of the nearly $60 billion in aid from the government’s $2 trillion stimulus package for economic relief, the airline industry says it’s not a cure-all for the waning demand in travel coronavirus.

“While this assistance is welcome, it’s important to remember that the relief package is not a cure for the unprecedented challenges we face,” Delta Air Lines CEO Ed Bastian told employees in a memo, according to CNBC.

Both Delta and United Airlines said going forward they are likely to become smaller airlines with fewer employees, although part of the government aid package, or some $25 billion in grants, requires the airlines to continue to pay employees through the end of September. The remainder of the bailout comes in the form of loans.

But given the spread of the virus, airline executives expect the new normal – drastic cuts in service, flights barely a quarter full – to last for quite a while.

“Based on how doctors expect the virus to spread and how economists expect the global economy to react, we expect demand to remain suppressed for months after that, possibly into next year,” United CEO Oscar Munoz and United president Scott Kirby, who’s scheduled to take the helm in May, wrote in a message to employees. “That means being honest, fair and upfront with you: if the recovery is as slow as we fear, it means our airline and our workforce will have to be smaller than it is today.”

Most airlines have asked employees to take voluntary unpaid leaves of absence or early retirement.

Mandatory stay-at-home measures implemented by more than a dozen states, inhibiting more than 80 million Americans from leaving their homes except to go to work or essential places of business such as grocery stores and banks, have contributed to the drastically falling numbers in airline travel and hotel stays.

But Kirby and Munoz remain optimistic.

“So when travel demand returns — and it will return — we will bounce back and be ready to accelerate towards our goal of becoming the best airline in the history of aviation,” they wrote in their memo.