Airlines Seek Aid as Threat of Bankruptcy Looms

Major carriers are reportedly asking the government for assistance and the Trump administration wants to provide aid.
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Airline shares have tanked amid the explosion of coronavirus as both business and leisure travelers stay at home.

Some analysts and investors have even expressed concern that major airlines could go bankrupt, as they did when travel virtually ceased after the Sept. 11, 2001, terrorist attacks.

CNBC correspondent Kayla Tausche wrote in a tweet that a senior administration official told her the White House is proposing loans to airlines “to help with reduced liquidity.” Congress would have to approve the loans.

U.S. airlines are asking the government for more than $50 billion, including both direct aid and loan guarantees, CNBC reported on its web site.

All three major U.S. airlines -- United Airlines  (UAL) - Get Report, American Airlines  (AAL) - Get Report and Delta Air Lines  (DAL) - Get Report -- have cut back on their flights, especially overseas as the coronavirus has ground international travel to a virtual halt.

Over the weekend, President Trump added the U.K. and Ireland to his travel ban for Europe.

 “Airlines are in free fall,” Cowen analyst Helane Becker wrote in a note. “We expect additional airline bankruptcies.” She cited discount airline Norwegian Air Shuttle as a possible example.

Virgin Atlantic, which is 49% owned by Delta Air Lines  (DAL) - Get Report, announced Monday it will reduce its flights 80% a day by March 26. The U.K.-based company’s workers will have to take eight weeks of unpaid leave over the next three months. The airline terminated its London Heathrow-Newark, N.J. route.

At last check, United shares traded at $39.37, down 5.45%, American at $14.72, up 2.87%, and Delta traded at $37.15, down 3.15%. American is still down 47% over the last month.