delta airlines (New York Stock Exchange: DAL) Y jet blue air ways (NASDAQ:JBLU) both said on Friday that they are applying for federal assistance under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, emphasizing the precarious state airlines are in.
airlines have been hit hard by the COVID-19 pandemic, losing a large chunk of its customers as travel demand evaporated overnight. They have slashed flights and grounded planes to cut costs, but no amount of cuts can make up for falling revenues.
Delta CEO Ed Bastian said in a memo to staff that the airline is spending more than $60 million a day, and that he expects second-quarter revenue to be down 90% year over year. The airline had 38,000 passengers on its planes last Saturday. On a normal Saturday at the end of March, it takes 600,000.
Bastian said that while he appreciates the government’s support, “without the self-help actions we’re taking to save costs and get new financing, that money would have run out in June.” Delta’s flight schedule is 80% below original projections, he said.
Meanwhile, JetBlue said it expects about 7,000 daily customers this month, down from the 120,000 it would expect during a normal April. On a typical day in April 2019, the airline received about $22 million in bookings and fees. It currently generates about $1 million a day and issues about $2 million a day in cash back.
CEO Robin Hayes told employees that JetBlue is burning through its cash cushion at a rate of about $10 million a day, even after parking more than 100 planes and cutting its hours by 70%.
“Today we submitted our request for payroll support funds to the Treasury Department and now begin negotiations with the United States government,” Hayes said in a press release. “I hope that things can move quickly, and we are available this weekend so that we can finalize a deal next week, as time is of the essence.”
To qualify for that federal aid, airlines They will be required to maintain minimum service levels and avoid layoffs through September 30, among other conditions, but all US airlines are expected to apply. American Airline Group has said will seek $12 billion in government funding, and Southwest Airlines management has indicated that the airline also intends to apply for funds.
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Lou Whiteman owns shares of Delta Air Lines. The Motley Fool owns stock and recommends Delta Air Lines and Southwest Airlines. The Motley Fool recommends JetBlue Airways. The Motley Fool has a disclosure policy.
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