As CARES Act Funds Run Out, Airlines Plead for More Aid

In March, U.S. air travel demand crashed from near 2019 levels to down more than 90% year over year. Refunds started to outpace cash ticket sales for many airlines, putting severe stress on their balance sheets. Only one thing enabled the industry to avoid desperate moves like mass furloughs and wholesale service cuts in small cities: a generous payroll support program included in the CARES Act.

That aid runs out in just a few days, but U.S. air travel has only recovered to about a third of pre-pandemic levels. As a result, airlines -- led by American Airlines (NASDAQ: AAL), Delta Air Lines (NYSE: DAL), and United Airlines (NASDAQ: UAL) -- and airline unions have been lobbying aggressively for a six-month extension of the payroll support program. Yet despite broad bipartisan support for such an extension, Washington gridlock seems increasingly likely to prevent it from becoming a reality.

The CARES Act payroll support program has covered the majority of U.S. airlines' payroll costs since the beginning of April. In exchange, the airlines had to agree not to implement any involuntary layoffs or furloughs before October. (They were also required to keep flying to all cities they served before the pandemic unless they received a government waiver, among other conditions.)

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Source Fool.com