COVID-19 Resurgence Clouds Outlook for US Aviation Industry

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kwon Jae-hee] As cases of the novel coronavirus infection (COVID-19) resurged in some U.S. states, the airline industry has begun stockpiling cash to prepare for an uncertain future by laying off thousands of employees and hastily reaching agreements on loan terms with the Treasury Department. This is because airline reservation rates plummeted after some states, known as so-called 'COVID hotspots,' locked down visitors coming from those areas.

According to the Wall Street Journal (WSJ) on the 7th (local time), United Airlines announced that it plans to notify employees of furloughs as early as this week. Initially, United Airlines had planned to issue layoff and furlough notices starting October 1, but now intends to implement them earlier. The number of layoffs corresponds to about 3,400 employees, or 30% of management and administrative staff. Delta Air Lines is also reported to have sent a similar internal notice to about 2,500 pilots last week.

United Airlines stated, "Since last month, after New York, New Jersey, Connecticut, and some other states announced that visitors from 'COVID hotspots' would be required to self-quarantine for 14 days, reservation rates have sharply declined."

Currently, Florida has emerged as a COVID-19 hotspot with more than 10,000 new cases reported for three consecutive days. Subsequently, Texas, California, and Arizona have also seen a rapid increase in COVID-19 cases. The total number of confirmed COVID-19 cases in the U.S. is estimated to be about 3 million, which is approximately 1% of the total population.

Accordingly, United Airlines, Delta, Southwest, JetBlue, and Alaska Airlines have additionally reached agreements on loan terms with the U.S. Treasury Department. Earlier, five airlines including American Airlines had completed agreements on loan terms with the Treasury on the 2nd. This is part of the $25 billion (approximately 29.925 trillion KRW) economic stimulus package passed by the U.S. Congress in March.

WSJ quoted a senior airline executive saying, "It's March again," and reported that "adjustments to the August flight schedule are inevitable."

This content was produced with the assistance of AI translation services.