Coronavirus Has Cash-Rich Airlines Scrambling
Top U.S. airlines like American Airlines (NASDAQ: AAL) and United Airlines (NASDAQ: UAL) hold enormous sums of cash and short-term investments on their balance sheets. They also supplement their liquidity with credit lines that allow them to draw billions of dollars.
With all of this readily accessible cash, you might think that these airlines could handle whatever curveballs nature and the economy might throw at them. Yet the escalating COVID-19 pandemic has sent the airlines into panic mode. Industry trade group Airlines for America recently requested that the federal government provide over $50 billion of aid to U.S. passenger airlines, with more than half of that coming in the form of grants and a suspension of excise taxes.
To some extent, this simply reflects the enormous revenue declines that airlines are expecting: particularly global carriers like American and United. However, airlines' reliance on advance ticket sales to help fund their businesses will also cause them to burn through huge sums of cash in a very short time.
Source Fool.com
