Airline stocks and shares of Boeing tumbled Tuesday afternoon after President Donald Trump called off talks with Democrats for a national stimulus package until after the election. Trump’s move appeared to close the main avenue for carriers battered by the pandemic to receive more federal funds to cover their labor bill and reverse thousands of job cuts.
American Airlines, United Airlines and other U.S. carriers began furloughing more than 32,000 workers last week. Airlines, struggling from weak demand during the pandemic and bleeding cash, had agreed to not cut any jobs until after Oct. 1 under the terms of $25 billion in federal payroll support passed in March.
Travel demand remains at one-third of last year’s levels, so airline executives and labor unions were pleading for more aid in Washington in recent weeks. The proposal had bipartisan support but remained stuck, as Democrats in Congress and the Trump administration repeatedly failed to reach agreement on a national coronavirus package that could have included more aid.
“We’re disheartened to hear that negotiations over a COVID-19 relief package are not progressing,” American Airlines said in a statement. “We will continue to make the case in Washington that action is needed to help workers across the country and lead America to the other side of this pandemic.”
It was not immediately clear if standalone legislation in the House or the Senate could advance without a broader aid package. But Sen. Roger Wicker, R-Miss., who introduced a bill last month with Sen. Susan Collins, R-Maine, that calls for $28 billion in additional aid for airlines and contractors, is trying to find a way to move it forward, according to a person familiar with the matter.
Airlines that started furloughing their workers said they would reverse course if more aid was approved.
“Time already ran out for U.S. airlines and many of our employees, yet there is a glimmer of hope that our leaders in Washington will act and save these jobs before it’s too late to turn back the clock,” Airlines for America, a lobbying group that represents major U.S. airlines, said in a statement. “Some U.S. airlines may be able to reinstate employees if they receive direct payroll assistance from the federal government soon, but that becomes increasingly challenging with each passing day.”
American’s shares dropped 4.5% to $12.53, while United’s closed at $34.88, down 3.7% on the day. Shares of Southwest Airlines, which asked its unionized employees on Monday to take pay cuts in order to avoid furloughs through the end of next year, fell 2.4% to $37.58. Delta Air Lines ended the day down nearly 3% at $31.06.
Boeing shares, already down on the day after the company issued a downbeat aircraft demand forecast, fell 6.8% on Tuesday to $159.54 after Trump’s announcement pausing stimulus talks.
