The CARE’s Act for Airlines: Not Enough!

Captain Jetson’s Investigative Aviation Reporter Alex Martinez is explaining why the Airline Stimulus Package, the part of the CARE act designed to help airlines, is not enough to sustain the airline industry.

The Coronavirus Aid, Relief, and Economic Security Act or CARE’s Act might need five, six or more stages to maintain stability in the United States, as sources have expressed!

While the problem is complex, sharing the economic package with the airlines is a game of resources.

Choosing whether the airlines or supporting industries get the next round of stimulus is a matter of who gets the bigger pie. Here at Captain Jetson, we are informing our readership to prepare for what’s coming.

We know the economic package isn’t enough

The airlines won $25 Billion in grants in exchange for not furloughing employees until September 30.

This is an uphill battle the government won’t win unless the airlines get a second-round of stimulus. But, that only seems likely with the condition of government equity stakes.

Captain Jetson has received information that phase four of the package is as follows:

For airlines, the next phase consists of which airlines will allow the U.S. Government to have an equity stake.

The U.S. Treasury Steven Mnuchin said to CNBC that he would not force airlines who wouldn’t accept an equity stake. However, the thing is, all the airlines need help.

What does it mean for airline employees and companies that support these airlines?

care act airlines TSA
Click the picture for TSA checkpoint travel numbers for 2020 and 2019. Source: TSA.

As you may see the nation is heeding the warnings. Updated daily, the statistics coming from the TSA shows less than 150,000 people are traveling throughout the United States on a daily basis at this time.

April will be worse than March. Which is not an April Fools joke!

What does it mean for Airline Employees?

The U.S. Government most likely would get a stake in the major airlines. It is very likely that all airlines take part in this program. However, the conditions are strict which would prolong the agony of the balance sheet.

The U.S. Treasury Secretary Steven Mnuchin said that the equity stake programs to the airlines are an optional one and that airlines won’t be forced to utilize the program.

CNBC Interview with Mnuchin

Scroll to 7 minutes and continue to minute 9 as the Treasury Secretary speaks about airlines. Video: CNBC/YouTube

While the airlines are U.S. based, the same can’t be said about the cruise-industry. U.S. Congress rules specify that the cruise industry must have a U.S. registration and pay most of their taxes in the U.S.

If airlines take part in this program here’s what they can expect

  • Additional Support from the government (can include monetary help).
  • A guarantee of sticking around.
  • Other benefits not yet known.

However, employees are worried that some U.S. Airlines won’t take part in this program as the conditions might become more restrictive than they are now.

Airlines on their part are thinking with their General Counsel on how flexible they could become and whether this program can have a better benefit-flexibility ratio at the time of taking it.

What is the solution to this?

Actual passengers are needed for revenue. It’s that plain and simple.

While we are having less than 150,000 daily passengers passing through our nation’s airports on March 31, 2020, April will be worse than March.

Brace for Impact

The passenger announcement used by flight attendants moments before an emergency landing is “Brace, Brace, Brace, Remain Seated, Keep your heads down.”

This is truly an appropriate expression for what the airlines are going through now.

Bottom Line: There’s more to it

I’ll defer my analysis to a later article. The next article will explain in more detail the moving parts and what all this means for the industry as a whole.

Do you agree that the care act’s impact on airlines is not enough to sustain the industry? You can contact Alex Martinez Rivera here.

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