President Biden’s $1.9-trillion economic rescue plan includes $14 billion in payroll support for U.S. airlines and $1 billion for their contractors, bringing the government’s total support for the industry to more than $63 billion since the COVID pandemic began.
The newest bailout is unlikely to be enough to prevent layoffs across the industry, with air travel not expected to return to pre-pandemic volumes until at least 2024, according to the International Air Transport Association.
After 2008’s Great Recession, airlines took six years to return to 2007’s passenger volumes.
“The industry is still completely upside down,” consultant Mike Barton at Flightpath Economics told the Financial Times. “Does another extension” of the bailout money “simple delay the inevitable” firings?
The airlines furloughed tens of thousands of workers when the first round of the so-called Payroll Support Program (PSP) expired 1 September, then recalled most when Congress extended the money in December. The new cash infusion will run out on 1 October.
Among the four main U.S. passenger lines, PSP funds accounted for 43 cents of every dollar the airlines reported in December as cash and short-term investment.
So far, the U.S. Treasury has disbursed about $35 billion of the $48 billion Congress has set aside for the air passenger industry, the Peter G. Peterson Foundation reported.
In return, the government is receiving warrants to buy shares in the companies, which could leave U.S. taxpayers owning 8 to 20 percent of the country’s major airlines.
TREND FORECAST: Under the best conditions, the airline industry is not expected to recover from the COVID War until 2023… or much later, since it will continue to decline until people feel safe to travel. If a Green Vaccination passport is mandatory, however, there will be a large percentage of “Don’t Vax Me” citizens who would rather not fly than get the jab.
Moreover, as we have noted, with more people working from home and meetings online becoming the new ABnormal, business travel, which accounts for 75 percent of airline profits, will not rebound to previous heights.
