American Airlines (AAL) - Get Report shares rose Monday after Chief Executive Doug Parker said he’s “confident” the federal government would extend the industry’s $25 billion bailout, so airlines wouldn't have to cut tens of thousands of workers starting Oct. 1.
The aid package is set to run out on Sept. 30. So Congress and the White House will have to reach an accord if they are to extend it. To be sure, there’s always the chance that President Donald Trump would try to provide aid on his own. The White House supports providing aid to the airline industry.
American shares recently traded at $12.78, up 4%. The stock has dropped 57% this year through Friday as the coronavirus pandemic has kept travelers at home.
On Friday, American said in a Securities and Exchange Commission filing that it had agreed with the Treasury Department on a $5.5 billion loan, using its frequent flier program as collateral.
The airline expects to be able to raise that number to $7.5 billion. The government initially offered American $4.75 billion. TheStreet reported earlier in September that American Airlines would seek help from the Treasury department.
As for Parker, “I’m confident” the payroll aid will be extended, he told CBS’s “Face the Nation” Sunday. “There’s certainly not much time left, but there’s enough time. Often times, a deadline like this is what is needed to get action. We’re hoping that is the case.”
He said, “Our plan is to get Congress and the administration to come together and get a relief bill passed. There is enormous bipartisan support for it.”
Parker said passenger demand is picking up a bit, with the company anticipating a 75% revenue drop in the third quarter and a 65% slide in the fourth quarter.