U.S airlines warn the £20 billion government aid is not a long-term solution for the curb in demand

U.S airlines warn the £20 billion government aid is not a long-term solution for the curb in demand

  • U.S airlines express concern that the £20 billion government aid may not be sufficient in the long run.
  • The U.S Coronavirus bill requires the airlines to avoid furloughs and pay employees through September 30th.
  • Qatar Airways continues operations but warns that the company is quickly running out of cash.

The U.S carriers appreciated the £20 billion in grants from Trump administration on Friday but highlighted that the Coronavirus pandemic is threatening to curb traveling for an extended period than originally thought. In an event of an extended ban on traveling, airlines expressed concern that they may have to resort to furloughs and job cuts in the upcoming months.

The grant as part of the U.S government’s Coronavirus aid bill requires the airlines to avoid furloughs and continue to pay its employees their regular salaries through September 30th.

United Airlines And Delta Airlines Commit To Avoiding Furloughs

The U.S carriers like Delta Airlines (NYSE:DAL) and United Airlines expressed commitment (NASDAQ:UAL) to avoiding furloughs and not cutting pay during this period but reiterated that the financial support wouldn’t resolve the issue of falling demand in the long run.

The airlines are resorting to requesting its workers to take unpaid leaves and reducing working hours for the rest of the staff to cut costs in the meantime.

The U.S airline industry currently employs around 750,000 workers. The sharp decline in demand amidst the Coronavirus crisis has pushed the carriers into cutting flights, minimizing global operations, and parking hundreds of jets in an attempt to sustain the financial stature to survive the economically challenging time.

Qatar Airways Expected To Seek Government Support

In separate news, Qatar Airways also made a statement on Sunday that it plans on keeping its flights operational for travelers that have been stranded on foreign lands and help them get to their homes. CEO Akbar al-Baker also highlighted in the comment that the company, however, is running quickly out of cash and may have to seek government support to sustain operations in the near future. In a phone interview, the CEO remarked:

“We have enough cash to take us through a very short period of time.”

The Middle East-based carrier is among the very few global airlines that have so far sustained operations despite the ongoing health emergency curbing demand and pushing the governments into wider restrictions on traveling.

By Wajeeh Khan
Mr. Khan specialises in Public Health by academia but is a trader by passion. Taking up two new hobbies of writing and trading in his teen years, he is now a professional trader and news writer with over 5 years of experience in various financial markets. Khan is passionate about bringing insightful articles to his readers and hopes to add value to their portfolios.

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