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Delta Air Lines Inc. offered cautious optimism that demand for travel is starting to return but said its losses were mounting, as the coronavirus pandemic looks likely to continue weighing on travel for years, the Wall Street Journal reported. “The virus has had a much broader impact over the course of the year than any of us were suspecting,” said Delta Chief Executive Ed Bastian. Delta had hoped it would be able to stop bleeding cash by the end of the year. Now the airline anticipates such a scenario won’t happen until spring, even while slashing costs. Delta ended September burning through $18 million in cash a day but expects to cut that to $10 million a day by the end of the year. Delta has taken a further blow because of its emphasis on business travel, which has all but halted and has been slower to resume than travel for leisure. Delta has built a war chest that it has said should help it survive a long downturn. The airline ended the quarter with close to $22 billion in liquidity and said it has slashed costs. It is also deferring new aircraft orders—a move it said would save $5 billion through 2022—and retiring older jets. Delta had spent years paying down debt before the pandemic hit, putting the airline in a better position than some rivals.

Apollo Global Management Inc. won court approval to provide a $1 billion bankruptcy loan for Grupo Aeromexico SAB, paving the way for the airline to proceed with its restructuring plans, Bloomberg News reported. The decision resolves a clash between Apollo and a group of bondholders while bolstering Aeromexico’s efforts to weather an unprecedented collapse in air travel. The disagreement had prompted a bankruptcy court in New York to delay a key hearing on the debtor-in-possession financing four times. Under the new pact, the minority lenders will be able to decide whether they want to convert their loans into equity, Timothy Graulich, a lawyer for Aeromexico, said Friday at the hearing. As the majority lender, Apollo will also be able to convert. Aeromexico, which unlike U.S. airlines hasn’t received government aid to help it through the coronavirus pandemic, filed for court protection three months ago as demand for flights tumbled. The airline’s passenger totals are still less than half their year-ago levels, with customers on lucrative international flights down 84 percent last month.

U.S. airlines were again holding out hope for another $25 billion in payroll aid after House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin yesterday discussed the possibility of standalone legislation for the struggling sector, Reuters reported. Their conversation was the latest in a series of turbulent developments on relief prospects in recent weeks for airlines, which last week began the furlough of tens of thousands of employees. Airline shares jumped on Wednesday after sinking abruptly a day earlier on remarks by President Donald Trump that his administration would abandon talks with congressional Democrats over a major stimulus package until after the Nov. 3 election. Airlines’ relief request enjoys wide bipartisan backing, but House of Representatives Transportation Committee Chairman Peter DeFazio failed last week to win approval of a standalone bipartisan measure for airlines by unanimous consent after some Republicans objected. Pelosi asked Mnuchin by phone on Wednesday to review DeFazio’s bill “so that they could have an informed conversation,” her spokesman, Drew Hammill, wrote on Twitter. They spoke again yesterday evening for 20 minutes and agreed to continue discussions today, Hammill said. A separate Republican-led attempt to pass standalone legislation in the Senate also failed after opposition from three Republican senators, including Rick Scott of Florida. The Republican bill proposes taking unspent money from a first COVID-19 relief package, while the House Democrats’ proposal does not include any cuts to existing spending to fund the program.

President Trump pulled the plug on ongoing bipartisan coronavirus relief talks in an abrupt move that jolted Wall Street and surprised lawmakers of both parties, but hours later called on Congress to approve a bill providing another direct check to many Americans, the Wall Street Journal reported. “I have instructed my representatives to stop negotiating until after the election when, immediately after I win, we will pass a major Stimulus Bill,” Trump wrote earlier yesterday on Twitter. Trump’s tweets appeared to end the long-running effort between House Speaker Nancy Pelosi (D-Calif.) and Treasury Secretary Steven Mnuchin to negotiate an agreement on another trillion-dollar-plus coronavirus relief deal. But later yesterday, Trump appeared to backtrack, calling on Congress to approve some additional assistance for airlines and a small-business aid program. He also tweeted that Congress should pass a bill providing another direct check to many Americans. “If I am sent a Stand Alone Bill for Stimulus Checks ($1,200), they will go out to our great people IMMEDIATELY. I am ready to sign right now,” Trump tweeted. Trump also called on Congress to quickly extend $25 billion in new payroll assistance to U.S. passenger airlines furloughing thousands of workers as air travel remains down sharply amid the coronavirus pandemic, according to Reuters. Democrats have largely resisted passing piecemeal bills, pushing instead for an overall agreement. Stocks turned lower yesterday on Trump’s tweets regarding the talks. Read more. (Subscription required.) 

In related news, Federal Reserve Chairman Jerome Powell yesterday reiterated his belief that the U.S. economy needs more fiscal support even though the recovery from the “natural disaster” of the coronavirus pandemic so far has been strong, MarketWatch.com reported. Powell argued in a speech that it was better for Congress to provide too much fiscal support than the reverse. “Too little support would lead to a weak recovery, creating unnecessary hardship for households and businesses,” Powell said. This would lead more businesses to declare bankruptcy and for households to run into severe economic distress. On the other hand, even if policy actions are more than is needed "it will not go to waste,” Powell said. “The recovery will be stronger and move faster if monetary policy and fiscal policy continue to work side by side to provide support to the economy until it is clearly out of the woods,” the Fed chairman said. Read more.

The International Air Transport Association warned that the world’s airlines are hemorrhaging cash at a rate of around $300,000 per minute or $13 billion per month, which could force large swathes of the industry into bankruptcy within months, FlightGlobal.com reported. With traffic levels set to remain stunted through 2021, IATA believes carriers will continue to burn cash next year at a rate of $5-6 billion a month, collectively – even assuming that a COVID-19 vaccine is discovered. Lowering its estimates for revenue passenger-kilometers, the airline association now expects December traffic levels to be 68 percent lower than last year, against a 55 percent reduction that it forecast in July. It does not see sector profitability returning until 2022. From examining the available cash and liquid assets of carriers in their six-month reports to the end of June, IATA found that on average airlines had enough funding to last just eight-and-a-half months, taking them to halfway through February 2021.

Southwest Airlines said yesterday that it is asking unions to agree to pay cuts in order to prevent furloughs and layoffs through 2021 as the industry struggles to stem losses from the coronavirus pandemic in the absence of more federal aid, Reuters reported. Unions represent about 83% of roughly 61,000 Southwest employees. Non-union staff salaries will be cut by 10 percent until Jan. 1, 2022, when they will return to the current level. “Our objectives are to make this quick and simple and avoid furloughs,” Chief Executive Gary Kelly said in an interview. The union representing Southwest pilots said that it had tentatively agreed to meet and discuss cost savings if a second COVID-19 relief package does not pass in Washington. The flight attendants and mechanics unions did not immediately comment. Rivals American Airlines and United Airlines began furloughing 32,000 employees last week when a ban on job cuts expired without another $25 billion in federal payroll support that airlines have been seeking. Read more. 

In related news, the Federal Aviation Administration aid yesterday it would extend temporary waivers of minimum flight requirements at some major U.S. airports through late March 2021 because of the coronavirus pandemic, Reuters reported. Airlines can lose their slots at congested airports if they do not use them at least 80 percent of the time. The FAA said it would extend the waivers at New York’s John F. Kennedy and LaGuardia airports and Ronald Reagan Washington National Airport that were set to expire in October. At four other U.S. airports where the FAA has a formal schedule-review process - Chicago O’Hare, Newark, New Jersey, Los Angeles and San Francisco - the agency proposes to extend credits to airlines for flights that were canceled due to the coronavirus as though those flights were operated through Dec. 31. Major airline groups cited “historically low levels of bookings, with overall bookings down 82 percent year-on-year for 2020 compared to the outlook for 2019; consumer demand that continues to fall ... and the need for schedule flexibility to support sustainable loads.” Read more.

U.S. airlines face a winter test of their finances and question marks over the reach of their domestic flight networks after failing, for now, to win fresh federal aid, Reuters reported. American Airlines and United Airlines began laying off 32,000 workers after a deadline passed with no new help from Washington, but told staff they would reverse this if lawmakers reach a deal on COVID-19 relief. The U.S. Senate adjourned yesterday until Monday evening, suggesting that no action on any airline assistance was near. U.S. House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin spoke for 50 minutes yesterday but “distance on key areas remains,” a spokesman for Pelosi said. U.S. airlines are collectively burning about $5 billion of cash a month as passenger traffic has stalled at around 30 percent of 2019 levels. After tapping capital markets, they say they have enough liquidity to last them at least 12 months at that rate. They have argued for another $25 billion in federal payroll aid to maintain their workforce and meet demand as the economy rebounds. Without the money, flight networks could further shrink, hampering their revenue power and shortening their liquidity runway. Between voluntary and involuntary furloughs, major U.S. airlines’ workforce will shrink by at least 25 percent in October.

Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi (D-Calif.) failed to strike a deal for a new stimulus package during a 90-minute meeting Wednesday but said they will continue negotiating, with time running out until the election, Bloomberg News reported. “We still don’t have an agreement, we still have more work to do,” Mnuchin told reporters, adding, “We’ve made progress in a lot of areas.” Pelosi said that she and Mnuchin were seeking some “further clarification” on each others’ positions and that “our conversations will continue.” The speaker said that the House will go forward with a vote Wednesday night on a $2.2 trillion Democratic stimulus plan she described as “our proffer” in negotiations with the White House. That legislation is less than the $3.4 trillion bill Democrats passed in May, but still more than Republicans have said they could accept. Senate Majority Leader Mitch McConnell (R-Ky.) said earlier that it was rife with “poison pills” that have nothing to do with pandemic relief. Read more.

In related news, The Trump administration has proposed including a $20 billion extension in aid for the battered airline industry in a new stimulus proposal to House Democrats worth over $1.5 trillion, White House chief of staff Mark Meadows said yesterday. “There’s $20 billion in the most recent proposal for the airlines that would give them a six month extension,” said Meadows. Meadows declined to provide the total value of the White House’s latest proposal but said the figure is “certainly above the $1.5 trillion that has been articulated to date.” “As you get above $1.5 trillion, it gets extremely difficult to justify based on the facts,” he cautioned, explicitly stating that $2 trillion was too much. “If it starts with a 2, it’s going to be a real problem,” he added. Read more.

U.S. airlines said that they will begin furloughing tens of thousands of employees today after congressional leaders and the Trump administration failed to reach a deal on a coronavirus relief package, the Washington Post reported. In making the announcements yesterday, the carriers left open the possibility that workers could be called back if a deal is reached in the next few days. American Airlines was the first to announce its plans, saying that it would begin furloughing 19,000 employees. Chief executive Doug Parker said in a letter to employees that he spoke with Treasury Secretary Steven Mnuchin late Wednesday about the status of his negotiations with House Speaker Nancy Pelosi (D-Calif.) but came away with no guarantee a deal would be reached. Parker wrote that the airline had to begin the furloughs but that he committed to Mnuchin he would recall employees if a deal is reached. A similar message came from United, which said it will be forced to furlough roughly 13,000 employees starting today.

Apollo Global Management Inc. is clashing with a group of bondholders over a $1 billion bankruptcy loan to Grupo Aeromexico SAB, holding up the Mexican airline’s restructuring effort, Bloomberg News reported. The disagreement stems from debate over how much power Apollo will have to make key decisions. The bondholder group, which took part in the first $200 million tranche of the debtor-in-possession financing led by Apollo, is trying to hold on to bargaining power, the people said. The two sides have diverging opinions about what they initially agreed to. The impasse is crimping progress in Aeromexico’s chapter 11 protection as the carrier seeks to weather an unprecedented collapse in air travel. The Mexico City-based company, which unlike U.S. airlines hasn’t received government aid, filed for court protection three months ago as the coronavirus pandemic devastated demand for flights.