As expected, the new stimulus package being proposed has a little relief earmarked for the airline industry. According to sources this stimulus bill will give airlines somewhere around $17 billion in a mixture of relief and funding from the government.
“Details are trickling in on the final provisions for the massive legislative package that will include coronavirus relief and government funding through September for the rest of the fiscal year. The deal is likely to include $17 billion for airlines, according to a lawmaker familiar with the negotiation. That will help air carriers recall furloughed workers and cover payrolls through March.” – Source
Too Big To Fail
When it comes to investing in the stock market, traders get nervous in tough economic times. An understandable response.
But certain companies are always safe. Big airlines are one of them.
“It would be stupidity on steroids if Congress left for Christmas without doing an interim package as a bridge,” says Democratic Senator Mark Warner.
Republican Senator Mitt Romney adds, “It’s simply unacceptable for us not to respond to help in this circumstance. The only time to borrow money is in a crisis, and this is a crisis.” – Source
When it comes to airlines staying in business. The answer is not only obvious, it’s bipartisan.
“We appreciate the bipartisan group of senators who pro-actively negotiated the framework for a much-needed, comprehensive relief package for our country which would include provisions intended to help airlines make payroll and protect the jobs of our industry’s hardworking employees,” writes Airlines for America (A4A) chief executive Nicholas Calio. “We continue to hold out hope that Congress will act swiftly to preserve the jobs of these hard-working men and women in the U.S. airline industry.” – Source
Will the country ever be normal again? Of course it will.
Will the country let Boeing and all the major airlines fail in the meantime? Of course not.
It’s Not Just About Travel
All of these major airlines aren’t just carrying people to the Bahamas and Hawaii. They have carrier planes.
While everyone has been home ordering on amazon, airlines have been seeing an uptick in the shipping business – Source
And how about the vaccines? How will they get distributed?
Major U.S. airlines. Delta has already been selected.
“Within three hours of being engaged, Delta Cargo had the vaccines in hand and on their way. Our successful COVID-19 vaccine shipments this week prove what we’ve known for a long time: that we’re ready and able to take on more in the all-hands-on-deck domestic and global distribution effort of this life-saving vaccine,” said Rob Walpole, Vice President – Delta Cargo.
“Our vaccine task force, which was created months ago to understand the shipping requirements and work with healthcare and pharmaceutical experts, has built scalable critical shipment capabilities to support this effort.” – Source
The government needs airlines for a number of reasons. They will not let them go bankrupt.
What Does The New Stimulus Bill Mean For Airlines
Only good things.
We knew the new stimulus bill would include airlines, but it’s nice for stock holders to get confirmation. Once vaccines are distributed and things start looking normal around June, airline stocks ($AAL, $BA, $UAL, $SAVE, $DAL) should be back to where they were pre-pandemic.