CNBC's "Squawk Box" team is joined by Nicholas Calio of Airlines of America, a trade group, to discuss why the government should bail out the airlines amid the coronavirus pandemic.
American Airlines CEO Doug Parker has never seen anything like this, even after 9/11 when airlines were briefly shutdown following terrorist attacks using commercial airplanes.
In fact, Parker says the economic fallout from the coronavirus pandemic is far worse for the industry than the crisis airlines faced after 9/11 when airplanes were briefly grounded and demand lagged for more than a year. With the COVID-19 outbreak that has brought global demand for flights to a near standstill, there’s no indication of when it might end, he told CNBC.
Parker is in Washington, D.C., talking with members of the Trump administration and leaders on Capitol Hill about the need for government aid to keep the airline industry from collapsing. He agreed to talk to CNBC about the state of the industry on background, asking not to be directly quoted given ongoing discussions about a relief package.
The Trump administration’s latest proposal working its way through the Congress calls for the airline industry to receive $50 billion in aid, including $25 billion in immediate grants that airlines would not have to repay.
Parker estimates the relief package, which would also include $25 billion in loans, would be enough money to allow U.S.-based airlines to sustain their current operations for about six months if business does not deteriorate any further.
American, along with every other airline, has seen customer demand plummet in the last two weeks as the coronavirus has spread in Europe and the U.S. and governments have urged people to stay home and avoid traveling. The calls for greater social distancing have caused event organizers and companies to cancel corporate travel and industry conferences as well as shutter major tourist attractions. Consumers have put off booking trips or canceled their plans for upcoming flights.
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