A day after an industry group representing U.S. airlines asked the federal government for nearly $60 billion in loans and grants to deal with the economic impact of the coronavirus, the Trump administration responded with a $50 billion figure — and the president promised support for Boeing as well.
Specifically, the administration signaled it would include $50 billion for airlines out of the $850 billion in an economic stimulus it was preparing to sell to Congress. The figure was confirmed by a senior administration official.
The administration didn’t offer details on how that $50 billion would be divvied up, or if it would just go to passenger airlines or cargo airlines as well.
“I am not going to comment on the specifics,” said Treasury Secretary Steven Mnuchin, during a news conference Tuesday, while President Donald Trump vowed, “the airline industry will be in good shape.”
But in what could become a controversial move, Trump signaled an interest in helping Boeing Co., the beleaguered aircraft manufacturer that has struggled in the aftermath of two fatal accidents of the Boeing 737 Max that killed 346. The company has been troubled by reports that it sacrificed safety in the pursuit of revenue and has faced harsh criticism as being too interested in its bottom line.
“We have to protect Boeing,” Trump said. “When the airlines aren’t doing well, Boeing is not going to be doing well, so we will be helping Boeing.”
Earlier this month, the FAA recommended Boeing be fined nearly $20 million for installing equipment in the 737 Max and other aircraft without approval.
The FAA also recommended fines in January and December, respectively.
The Max has been grounded since last March, in the aftermath of the crashes, and Boeing has struggled to get the aircraft back into operation.
Boeing responded with some suggestions for how the government could help aircraft manufacturers.
“Boeing supports a minimum of $60 billion in access to public and private liquidity, including loan guarantees, for the aerospace manufacturing industry,” the company said in a statement Tuesday without specifying the public and private shares of that support. “This will be one of the most important ways for airlines, airports, suppliers and manufacturers to bridge to recovery. Funds would support the health of the broader aviation industry, because much of any liquidity support to Boeing will be used for payments to suppliers to maintain the health of the supply chain.”
While the administration was light on specifics of its support for airlines Tuesday, it has a blueprint it could choose to follow: Airlines for America, the industry group that asked for the $58 billion on Monday, said the government should provide passenger carriers $25 billion and cargo airlines $4 billion in immediate grant assistance, with an additional $25 billion for passenger airlines and $4 billion for cargo airlines in zero-interest loans and loan guarantees.
The group also seeks tax relief from their 2020 excise taxes and for taxes on tickets, cargo and fuel through December 2021.
Joel Bacon, Executive Vice President of Government and Public Affairs for the American Association of Airport Executives, said while his organization is backing the airports’ request, it has concerns about the implications of excise tax relief.
That tax, he said, typically goes to a trust fund for airports. If there’s a shortage in the trust fund, the federal government will be forced to take money from general revenue. He questioned why the federal government wouldn’t just take the needed dollars from general revenue in the first place.
“It’s not a mechanism we would’ve chosen,” he said. “But more broadly, we’re trying to be supportive of airlines as we get through the current crisis.”
But his association and Airports Council International-North America signaled they would require assistance as well. They’re asking for $10 billion to help them navigate through the losses, in part to pay off the $100 billion in collective debt, including $7 billion they owe before the end of the year, as well as paying for ongoing operational costs. “In our view the package that moves should include airline relief and include airport relief as well, given the symbiotic, interdependent relationship between the two.”
Airlines have made sweeping cuts to services in the wake of both the pandemic and responding travel restrictions.
United Airlines said it would cut its flights by 50 percent in April and May, while American Airlines announced it would cut international flights by 75 percent through May 6.
Pelosi: Workers first
Speaker Nancy Pelosi and Transportation and Infrastructure Chairman Peter A. DeFazio spoke with U.S. airline CEOs Tuesday afternoon, at their request, spokesman Drew Hammill said in a Twitter update on the speaker’s activities.
“There was agreement on the crucial contribution aviation workers provide to the nation’s economy; the need for big, immediate action; and that assistance must put workers’ paychecks and benefits first,” he said.
Four Democratic senators, meanwhile, wrote a letter to Senate leadershi purging them to include consumer and worker protections in any stimulus helping the airline and cruise industries.
Sens. Edward J. Markey, D-Mass., Richard Blumenthal, D-Conn., Sheldon Whitehouse, D-R.I. and Tammy Baldwin, D-Wis., argued that any bailout should provide protections to employees.
“We cannot permit the airline industry to obtain federal assistance to weather the coronavirus and then return to these predatory business practices after the crisis,” they wrote, arguing that the Sept. 11 bailout of the industry helped stockholders but did nothing to protect airline employees.
In the House, DeFazio’s committee has jurisdiction over aviation, but also over buses, rail and auto. Even as Airlines for America sent out its dire prognostications, the American Bus Association, a trade association representing the motor coach industry, estimated it will lose more than $8 billion over the next five months.
And the American Public Transit Association sent out a memo requesting nearly $13 billion to offset losses to public transit, which has also been devastated by decreases in ridership.
“Without these emergency funds, public transit agencies may be required to suspend services,” the group warned.
The Washington Metropolitan Transit Authority, announcing “major service reductions,” said its Metro system ridership was down nearly 70 percent Monday alone.
The U.S. Travel Association on Tuesday projected that decreased travel caused by the pandemic would have an $809 billion impact on the economy this year, eliminating 4.6 million travel-related jobs. Association President and CEO Roger Dow, who met with the White House on Tuesday afternoon, urged the Trump administration to consider $150 billion in relief for the travel sector, including Small Business Administration loans and a “travel workforce stabilization fund” for industry employees.
Justin Harclerode, a spokesman for Rep. Sam Graves, R-Mo., the ranking Republican on the House Transportation and Infrastructure Committee, said the committee is focused on all modes, including aviation.
“These ideas are being collected and weighed, and we’ll see what makes it into any final package,” he said.
Lindsey McPherson contributed to this report.