Will COVID-19 Permanently Ground Airlines?
There are few sectors that have been hammered as hard as travel since the novel coronavirus pandemic began. Even the so-called "travel leaders" major airlines are teetering on the edge. Passengers are staying away in droves, flights are being canceled, and the few that are operating are mostly full — of empty seats. Air travel's bleakest time since 9/11 raises serious doubts for the industry and its investors. But for several reasons, I still don't think the COVID-19 crisis marks the end of air travel.
In an interview on NBC's Today May 12, Boeing (NYSE: BA) CEO Dave Calhoun used words like "grave" and "apocalyptic" to describe the state of the airline industry. He even went as far as to say that a major U.S. airline would go out of business by the end of the year. Calhoun also warned that it could take from "three to five years" for the industry to recover to pre-pandemic growth rates.
At the end of March, Congress approved a $50 billion aid package to shore up the nation's airlines, part of its $2 trillion coronavirus pandemic relief plan. Half of that money — $25 billion — comes as grants to keep airline employee paychecks coming through Sept. 30. After that, Calhoun said, with airlines only operating at a 25% passenger load, and only climbing to around 50% of normal traffic by year's end (being optimistic), airline jobs will be lost, and the burden will permanently ground some carriers.
Source Fool.com