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United Airlines yesterday said that it is warning about 36,000 front-line employees — more than a third of its staff — about potential furloughs as the coronavirus pandemic continues to roil travel demand, CNBC.com reported. The potential for the mass job cuts, the largest announced by a U.S. airline so far, comes as signs of a recovery in air travel fade with new coronavirus infections and travel restrictions. Other airlines have warned employees about possible staff reductions and are likely to follow suit with similar formal notices in the coming weeks. Federal law requires employers to give staff notice about possible layoffs or temporary furloughs 60 days in advance. United and other airlines that took $25 billion in federal payroll support are prohibited from laying off, furloughing or cutting the pay rates of staff until Oct. 1. In a memo sent to employees Wednesday, United said workers who are informed that their jobs are at risk might not ultimately get furloughed. The company said it will exhaust voluntary measures before cutting employees. Some of the furloughed staff may be called back to work but that will depend on a return to demand, which some industry executives say could take years. 

Treasury officials yesterday announced that five more airlines have signed letters of intent to accept government loans through the $2 trillion coronavirus economic relief package known as the CARES Act, the Washington Post reported. Alaska Airlines, Delta Air Lines, JetBlue Airways, United Airlines and Southwest Airlines join American, Frontier, Hawaiian, Sky West and Spirit airlines, which signed letters of intent last week. That brings to 10 the number of U.S. carriers that have signaled they will accept loans in addition to billions of dollars in government grants as they struggle to stay afloat amid the worst economic downturn in the industry's history. Under the CARES Act, airlines were eligible to receive more than $50 billion in grants and loans. The $25 billion grant program was focused on keeping pilots, flight attendants, mechanics and other front-line workers on the job. Another $4 billion in grants was made available to cargo carriers. The CARES Act provided $46 billion in loans, with $25 billion available to airlines, certified repair stations and ticket agents. Companies that receive loans must follow conditions similar to those required under the grant program, including keeping employees on the payroll through the end of September, maintaining certain levels of service as far out as 2022, and limiting stock buybacks and executive compensation.

Grupo Aeromexico SAB, Mexico’s second-largest airline, filed for bankruptcy in the U.S., becoming the latest in a string of Latin American carriers to seek court protection after the COVID-19 pandemic caused a severe downturn in travel, Bloomberg News reported. The carrier will “continue operating and use chapter 11 as a way to strengthen its financial position and liquidity,” according to a statement to the Mexican stock exchange yesterday. Aeromexico said that the goal will be “protecting and preserving its operations and assets and implementing the necessary operational adjustments to face COVID-19-related impact.” Aeromexico saw the number of passengers it carried plummet more than 90 percent as governments grounded flights and travelers stayed home. The airline struck deals with labor groups and suppliers in May to cut costs by more than half to around $50 million a month, while offering its employees unpaid leave. Latin American airlines, unlike their counterparts in the U.S. and Europe, have received scant government support even as travel demand plunged and the coronavirus prompted countries to seal borders. The region’s largest carrier, Latam Airlines SA, filed for chapter 11 bankruptcy in May just weeks after Avianca Holdings SA, Colombia’s biggest airline.

A New York court has sent subpoenas to Etihad and ratings agency Fitch this week seeking a document at the centre of a battle over $1.2 billion in debt issued by the Abu Dhabi carrier and airlines it partly owned, according to legal documents reviewed by Reuters. Investors, including fixed-income specialist BlueBay Asset Management, are seeking access to a “debt assumption agreement” signed by Etihad and Alitalia, the Italian carrier, in 2016, before Alitalia went bankrupt. Etihad issued bonds in 2015 and 2016 through an Amsterdam-based special purpose vehicle, EA Partners (EAP), which then distributed the money to Etihad and other airlines, including Alitalia. According to EAP filings with the London stock exchange and a Fitch report in May 2017, Etihad agreed to cover the debt owed by Alitalia under the debt assumption agreement. The investors believe the document will help them recover part of the money they invested in the bonds and sought access to it in a lawsuit filed on June 16 with the U.S. District Court for the Southern District of New York. Judge P. Kevin Castel approved their request and subpoenas were hand delivered to registered agents of Fitch and Etihad in New York ordering them to disclose the debt agreement. They each have until July 7 to respond to the order or object.

A major U.S. pilots union said yesterday that it has begun discussing with key lawmakers a plan for the government to purchase seats on each flight to prevent passengers from having to sit next to strangers, Reuters reported. The idea, launched by the Allied Pilots Association (APA) representing American Airlines’ 15,000 pilots, is aimed at easing a return to pre-pandemic passenger levels while creating a level playing field across the airline industry. As of now, some but not all U.S. airlines are blocking middle seats or capping the number of seats they are selling on each flight in order to allow for more space between passengers. Air travel has dropped dramatically in the midst of the coronavirus pandemic. Under the plan, the price of empty seats would be based on industry average costs for 2019, and as immunity to COVID-19 rose, the number of empty seats bought by the government would fall.

Grupo Aeromexico SAB is considering a chapter 11 filing in the U.S. as the coronavirus pandemic ravages the airline industry, Bloomberg News reported. The Mexican carrier is weighing its options and no final decision has been made. The company is working to coordinate with creditors on a restructuring, and is considering all the alternatives. An Aeromexico bankruptcy would be the third in six weeks by a major Latin American airline, after Latam Airlines Group SA and Avianca Holdings SA sought court protection. Passenger traffic in the region fell by 96 percent in April amid the pandemic, according to the International Air Transport Association. But Latin American governments, unlike their counterparts in the U.S. and Europe, have been reluctant to offer support for airlines. Aeromexico said it hasn’t initiated or made a decision to initiate restructuring under chapter 11. “At this moment, we’re identifying additional sources of financing to strengthen our operative flows,” the company said in a securities filing Friday. “We’re also analyzing different alternatives to successfully reach, in the medium and long term, an orderly restructure of our financial commitments without disrupting operations.” Aeromexico is coordinating with unions, creditors and lessors, it said.

After months of doing their jobs from home, many executives and employees say all those hours in the sky and nights away from home may not be necessary going forward, the Wall Street Journal reported. A major decline in corporate travel spending would have vast implications for the nation’s airlines, hotels and rental-car companies. Air carriers have predicted it could take years for business travel to recover to their pre-Covid-19 levels, though a vaccine could bolster confidence. Delta Air Lines Chief Executive Ed Bastian said on an industry webcast earlier this month that the carrier would operate twice as many domestic flights in July as in May. Still, “business travel is very limited right now,” he said. After 9/11, it took the airline industry six years to recover. As many companies look to cut costs, travel is an easy place to start, industry veterans say. “It’s a lot more palatable to say you’re going to cut 30% of your travel, versus lay off more people,” said Sloan Dean, chief executive of Remington Hotels, which operates nearly 90 properties for brands that include Marriott, Hilton and Hyatt.

Delta Air Lines Inc. said it plans to seek concessions from lenders to avoid a debt default stemming from the coronavirus pandemic’s impact on air travel, WSJ Pro Bankruptcy reported. The Atlanta-based carrier said yesterday that by early next year it expects to be out of compliance with certain credit requirements due to the plunge in demand for passenger flights. Certain of Delta’s loans also include collateral requirements tied to the value of aircraft fleet and other assets. Delta said that it would seek to renegotiate terms with its lenders and expects to obtain amendments, but acknowledged it could end up in debt default if such discussions aren’t successful. Lenders and bondholders after a default could demand immediate repayment and potentially repossess collateral, Delta said. Delta carried a total debt load of almost $16 billion as of the end of March. At the time, the company had $6 billion of cash and cash equivalents on its balance sheet. The company yesterday said that it expects revenue in the second quarter to decline 90 percent year-over-year, with capacity down 85 percent compared with last year’s level due to demand disruptions from the pandemic.

Fifteen U.S. airlines were granted final government approval yesterday to temporarily halt service to 75 domestic airports as travel demand has been crushed due to the coronavirus pandemic, Reuters reported. The U.S. Transportation Department said all airports would continue to be served by at least one air carrier. Despite some objections to a tentative list made public on May 22, the government did not make any changes. The U.S. airline industry has been awarded $25 billion in government payroll assistance grants to help weather the pandemic. While carriers must maintain minimum service levels to receive the assistance, many petitioned to stop service to airports with low passenger demand. The department has previously allowed some airlines to halt service to some airports and rejected other requests. Cities that Delta can halt service to include Aspen, Colo.; Bangor, Maine; Santa Barbara, Calif., and Flint, Mich.. United can halt service to airports including Chattanooga, Tenn.; Hilton Head and Myrtle Beach, South Carolina as well as Key West, Florida. Other airlines winning approval to halt some flights include American Airlines, Sun Country Airlines and Silver Airlines.