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Airlines Seek Government Assistance Due To Coronavirus Impact

Fear is in the air so planes are grounded — although not officially.

Benzinga · 03/16/2020 20:26

Fear is in the air so planes are grounded — although not officially.

While U.S. airlines may need to halt flights, demand is already at a staggeringly low point and countries are voluntarily closing their borders and enacting travel curbs in an effort to slow the coronavirus from spreading. There's no doubt the airline industry has definitely been one of the industries hardest hit by the pandemic. 

A $50B Bailout?

The U.S. airline industry is seeking more than $50 billion in government assistance, according to lobbying group Airlines for America, which represents Southwest Airlines (NYSE: LUV), Delta Airlines (NYSE: DAL), American Airlines (NYSE: AAL), JetBlue (NASDAQ: JBLU) and United Airlines (NYSE: UAL).

Impact On Travel Demand

To put into perspective the detrimental impact the coronavirus has had on the industry, a bailout for the airlines would be the first of its kind since the 9/11 attacks.

The Breakdown

The bailout calls for up to $25 billion of immediate assistance in grants as compensation for reduced liquidity for passenger carriers and another $25 billion in the medium- to long-term in zero-interest unsecured loans or zero-interest unsecured loan guarantees.

“U.S. carriers are in need of immediate assistance as the current economic environment is simply not sustainable. This is compounded by the fact that the crisis does not appear to have an end in sight,” Airlines for America said in a statement. 

Alternative Investments

While the airline industry is taking a hit, investors are flocking to other stocks that are set to benefit from the coronavirus as government officials plead for citizens to stay inside and socially distance themselves. Some of those stocks include Roku (NASDAQ: ROKU) and Peloton (NASDAQ: PTON).