Airlines for America (A4A), the trade organization for the leading U.S. airlines, called on the federal government to provide more than $50 billion in immediate financial assistance to commercial and cargo airlines in the form or direct grants, interest free loans and tax relief, noting the current economic environment is simple not sustainable and “the crisis does not appear to have an end in sight.”
“This is a today problem, not a tomorrow problem,” says Nicholas Calio, A4A president and CEO, in a press release. “It requires urgent action.”
The A4A is recommending the government provide passenger carriers with the aggregate amount of $25 billion to compensate for reduced liquidity, from Dec. 31, 2019 through Dec. 31, 202 attributable to the COVID-19 virus. It also called for cargo carriers to receive $4 billion in grants.
On top of that, the A4A also called for an industry-specific loan program of up to $25 billion, in which the Federal Reserve would purchase financial instruments from or provide zero interest unsecured loans or zero interest unsecured loan guarantees to U.S. Part 121 passenger air carriers. Is also called for a $4 billion loan guarantee program for cargo air carriers.
“The process should be simple, straightforward, and streamlined,” the A4A adds. “Given the credit profile of the industry prior to the onset of COVID-19, participation should be open to all carriers, no carrier shall be required to collateralize any instrument, and the particular instruments purchased or guaranteed should be structured so as to expedite the participant’s ability to re-access the private capital markets as promptly as practical and to stabilize their existing credit ratings.”
The final part of the A4A program would be tax rebates to air carriers that equal the federal excise taxes paid into the Airport and Airway Trust Fund (AATF) that have been remitted to the U.S. Government beginning January 1, 2020 through March 31, 2020. The A4A also calls for a temporary Aviation Excise Tax Repeal, including taxes on tickets, cargo and fuel through December 31, 2021.
“The economic impact on U.S. airlines, their employees, travelers and the shipping public is staggering, the A4A says. “This crisis hit a previously robust, healthy industry at lightning speed and we remain concerned that the impacts of this crisis will continue to worsen.”
