Grupo Aeromexico has wound up discussions with two labor unions but remains in talks with two more, it said yesterday in an update on negotiations that are a requirement for the airline to receive a second tranche of bankruptcy financing, Reuters reported. Aeromexico filed for chapter 11 protection in a U.S. court in June, after the coronavirus pandemic slammed the global travel industry. The carrier was approved for up to $1 billion in debtor-in-possession (DIP) financing, and received an initial $100 million payment in September. Aeromexico said it had wrapped up negotiations with the STIA and Independencia unions, which represent airline industry workers, while it remains in talks with the ASSA and ASPA unions, which represent flight crews and pilots respectively. It did not detail terms of the completed agreements. The airline is required to reach agreements with all four unions to access a second tranche of DIP funding. The company in November requested permission from a U.S. bankruptcy court to dismiss 1,830 employees, including 855 unionized workers.
Despite weeks of increases in coronavirus cases and hospitalizations, U.S. air travel hit a pandemic record this weekend as Americans crisscrossed the country for the holidays, the Washington Post reported. The Transportation Security Administration said yesterday that it had screened 1,284,599 passengers on Sunday. Travel is down 55 to 65 percent compared with before the coronavirus pandemic, but Sunday marked the highest number of travelers since mid-March and the sixth time in 10 days the daily volume exceeded 1 million. At the same time, about 200,000 new coronavirus cases have been reported daily in recent weeks, with a record high of 252,431 on Dec. 17. The nation’s overall caseload surpassed 19 million Sunday, even as the holidays were expected to cause a lag in reporting. Hospitalizations have exceeded 100,000 since the start of December and hit a peak of 119,000 on Dec. 23. Deaths are averaging more than 2,000 a day, with the most ever reported — 3,406 fatalities — on Dec. 17.
President Trump unexpectedly capitulated yesterday and signed the stimulus bill into law, releasing $900 billion in emergency relief funds into the economy and averting a Tuesday government shutdown, the Washington Post reported. White House officials didn’t explain why the president decided to suddenly back down and sign into law a bill he had held up for nearly a week and had referred to as a “disgrace” just days earlier. Trump signed the bill while vacationing in Florida and on a weekend when he had allowed unemployment benefits for 14 million Americans to expire. He had demanded changes to the stimulus and spending package for a week, suggesting he would refuse to sign it until these demands were met. This continued defiance caused lawmakers from both parties to panic over the weekend, worried about the implications of a government shutdown during a pandemic. It was unclear what prompted him to change his mind late Sunday, but he was under tremendous pressure from Republicans to acquiesce. The package will extend aid to millions of struggling households through stimulus checks, enhanced federal unemployment benefits, and money for small businesses, schools and child care, as well as for vaccine distribution. It also repurposes $429 billion in unused funding provided by the Cares Act for emergency lending programs run by the Federal Reserve. Read more.
Congress last night overwhelmingly approved a $900 billion stimulus package that would send billions of dollars to American households and businesses grappling with the economic and health toll of the pandemic, the New York Times reported. Treasury Secretary Steven Mnuchin said that hundreds of dollars in direct payments could begin reaching individual Americans as early as next week. The long-sought relief package was part of a $2.3 trillion catchall package that included $1.4 trillion to fund the government through the end of the fiscal year on Sept. 30. It included the extension of routine tax provisions, a tax deduction for corporate meals, the establishment of two Smithsonian museums, a ban on surprise medical bills and a restoration of Pell grants for incarcerated students, among hundreds of other measures. Though the $900 billion stimulus package is half the size of the $2.2 trillion stimulus law passed in March that provided the core of its legislative provisions, it remains one of the largest relief packages in modern American history. It will revive a supplemental unemployment benefit for millions of unemployed Americans at $300 a week for 11 weeks and provide for another round of $600 direct payments to adults and children. The legislative text is likely to be one of the longest ever, and it became available only a few hours before both chambers approved the bill. In the Senate, the bill passed 92 to 6, with Senators Marsha Blackburn of Tennessee, Ted Cruz of Texas, Ron Johnson of Wisconsin, Mike Lee of Utah, Rand Paul of Kentucky and Rick Scott of Florida, all Republicans, voting no. It will now go to President Trump for his signature. But with as many as 12 million Americans set to lose access to expanded and extended unemployment benefits days after Christmas, passage was not in doubt. A number of other pandemic relief provisions are set to expire at the end of the year, and lawmakers in both chambers agreed that the approval of the $900 billion relief package was shamefully overdue.
Senate leadership announced a bipartisan deal on an approximately $900 billion economic relief package yesterday that would deliver emergency aid to a faltering economy and a nation besieged by surging coronavirus cases, the Washington Post reported. After months of contentious negotiations and seemingly intractable partisan gridlock, Senate Majority Leader Mitch McConnell (R-Ky.) and Senate Minority Leader Charles E. Schumer (D-N.Y.) took to the Senate floor to say that a deal had been finalized and could be quickly approved. The emerging stimulus package was expected to direct hundreds of billions of dollars in aid to jobless Americans, ailing businesses and other critical economic needs that have grown as the pandemic ravages the country and batters the economy. The House and Senate on Sunday night approved a one-day extension of government funding to allow the final bill text on the relief package to be written. President Trump signed the stopgap measure, preventing a government shutdown. The legislation includes stimulus checks for millions of Americans of up to $600 per person. The size of that benefit would be reduced for people who earned more than $75,000 in 2019 and disappear altogether for those who earned more than $99,000. The stimulus checks would provide $600 per adult and child, meaning a family of four would receive $2,400 up to a certain income. Congress would also extend federal unemployment benefits of up to $300 per week, which could start as early as Dec. 27. The income criteria for the stimulus checks is expected to reflect that of the first round of relief payments sent by the Treasury Department earlier this year. Read more.
In related news, a bipartisan legislative deal unveiled by U.S. lawmakers yesterday will grant U.S. airlines $15 billion in new payroll assistance that will allow them to return more than 32,000 furloughed workers to payrolls through March 31, Reuters reported. The support is part of $45 billion earmarked for the transportation sector in a $900 billion package for COVID-19 relief. Amtrak, the nation’s largest passenger railroad firm, is due to receive $1 billion while $14 billion will go to public transit systems and $10 billion to state highways, a senior Democratic aide said. The legislation is also expected to include significant changes to how the Federal Aviation Administration certifies new airplanes following two Boeing 737 MAX crashes in Indonesia and Ethiopia that killed 346 people, three congressional aides said, but specific details were not immediately available. Read more.
Norwegian Air’s shareholders endorsed the carrier’s financial rescue plan in a series of votes today, the airline said, one of several hurdles the company must clear to survive the COVID-19 pandemic, Reuters reported. Norwegian faces difficult negotiations with creditors in the coming months as it seeks to reduce its debt and liabilities of some 66.8 billion crowns ($7.75 billion). It must also find investors and lenders willing to put up fresh cash. The airline obtained creditor protection this month from courts in Norway and Ireland, giving it some breathing space as it seeks to convert debt into equity. The company aims, with the help of the courts, to emerge by Feb. 26 as a smaller but more efficient carrier with fewer aircraft, less debt and more equity. More than 80 percent of Norwegian’s owners voted in favour of letting the board raise up to 4 billion Norwegian crowns from a sale of shares or hybrid instruments. If it fails, Norwegian has said it could run out of cash by the end of March.
Airlines would get $17 billion in U.S. government aid to recall furloughed workers and help cover payrolls through March under a bipartisan pandemic relief package unveiled in Congress on Monday that won immediate backing from an industry group, Bloomberg News reported. Airlines “enthusiastically support” the proposal, the trade group Airlines for America said in a press release. Carriers will attempt to bring back workers who have been laid off if it passes, “but that becomes increasingly challenging with each passing day,” the group said. House Speaker Nancy Pelosi asked top congressional leaders in both parties to meet yesterday to discuss COVID-19 relief and a crucial government spending package, congressional aides said, in what could be a make-or-break moment for a grand bargain after months of stalemate. The $748 billion bill was put forth by a dozen senators and has the support of 50 House members. Some Democrats in the group suggested voting on the bill even though it doesn’t have a top Democratic priority of state and local aid. Carriers are losing more than two-thirds of passengers compared with 2019 levels due to COVID-19 and cut tens of thousands of workers after initial government assistance aimed at paying salaries expired on Oct. 1.
Regulators, insurers and experts are warning airlines to take extra care when reactivating planes left in extended storage during the COVID-19 pandemic, citing potential pilot rustiness, maintenance errors and even insect nests blocking key sensors, Reuters reported. The unprecedented number of aircraft grounded as coronavirus lockdowns blocked air travel —at one point reaching two-thirds of the global fleet — has created a spike in the number of reported problems as airlines return them to service. The number of “unstabilised” or poorly handled approaches has risen sharply this year, according to the International Air Transport Association (IATA). Such mishaps can result in hard landings, runway overshoots or even crashes. Worried by IATA’s data, insurers are questioning airlines about whether they are doing extra pilot training to focus on landings, said Gary Moran, head of Asia aviation at insurance broker Aon PLC.
Norwegian Air was given additional creditor protection by a court in Norway yesterday on top of that granted by an Irish judge on Monday, allowing the cash-strapped airline’s restructuring efforts to continue, Reuters reported. “A supplementary reconstruction process under Norwegian law will be to the benefit of all parties and will increase the likelihood of a successful result,” Chief Executive Jacob Schram said. The company, which helped transform transatlantic travel, expanding the European budget airline business model to longer-haul destinations, has been forced to ground all but six of its 140 aircraft amid the COVID-19 pandemic. If successful in convincing creditors and owners of its future potential, Norwegian could, with the help of the courts, emerge as a smaller but more efficient carrier with fewer aircraft, less debt and more equity. The airline, which has said it could run out of cash by the end of the first quarter of next year, aims to complete the debt restructuring by Feb. 26.
The U.S. passenger and cargo airline industry saw total employment fall by nearly 29,000 workers through the month ending in mid-October as government restrictions on laying off staff expired, Reuters reported. The U.S. Transportation Department said U.S. airlines employed 673,278 workers in mid-October, which was 81,749 fewer than in March when U.S. travel demand started falling dramatically due to the coronavirus pandemic. The department said that since March, United Airlines had reduced its workforce by 32 percent, or 29,243 employees, while Delta Air Lines eliminated 32 percent of its jobs, affecting 28,751 employees. In October, American Airlines and United Airlines said they were furloughing more than 32,000 workers after the prior $25 billion payroll assistance program expired on Sept. 30. The U.S. airline industry is still losing billions of dollars a month as travel demand remains down more than 60 percent and recent coronavirus travel advisories have discouraged holiday travel.
