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The Trump administration and congressional leaders rushed on Wednesday to assemble a massive stimulus package aimed at preventing the U.S. economy from plummeting into its worst collapse since the Great Depression, as fears about the coronavirus pandemic brought much of American life to a standstill, the Washington Post reported. The administration’s $1 trillion proposed rescue plan, which forms the basis for fast-moving negotiations on Capitol Hill, includes sending two large checks to many Americans and devoting $300 billion toward helping small businesses avoid mass layoffs. Priorities laid out in a two-page Treasury Department document also include $50 billion to help rescue the airline industry and $150 billion to prop up other sectors, which could include hotels. The White House is vetting these proposals with Senate GOP leaders before engaging more fully with Democrats, so the package is certain to evolve in coming days. Democrats, meanwhile, are eyeing their own priorities, largely aiming to shore up safety-net programs and the public health infrastructure, as well as send money directly to American taxpayers, while shunning corporate bailouts. Rep. Maxine Waters (D-Calif.) proposed on Wednesday having the Federal Reserve send $2,000 to every American adult and $1,000 to every American child until the crisis ends.

The Trump administration is asking Congress to approve a massive economic stimulus package of around $850 billion to stanch the economic free-fall caused by the coronavirus, the Washington Post reported. Treasury Secretary Steven Mnuchin will present details to Senate Republicans today. The package would be mostly devoted to flooding the economy with cash, through a payroll tax cut or other mechanism with nearly $50 billion directed specifically to helping the airline industry. The $850 billion package would come in addition to another roughly $100 billion package that aims to provide paid sick leave for impacted workers, though the details of that legislation remain very fluid as it moves through Congress. Mnuchin would like to see the package pass the Senate by the end of the week, he told senators yesterday. Read more.

In related news, U.S. airlines are seeking over $50 billion in financial assistance from the government, more than three times the size of the industry’s bailout after the Sept. 11 attacks, the Wall Street Journal reported. The exact form of the aid—and the amount—is under discussion with Trump administration officials and congressional leaders. A potential aid package could include government-backed loans, cash grants and other measures including relief from taxes and fees. Industry trade group Airlines for America, or A4A, also proposed $8 billion in grants and guarantees for cargo carriers. U.S. airports are separately seeking $10 billion in assistance to counter forecast full-year losses already approaching $9 billion. Read more. (Subscription required.) 

Boeing Co. has asked White House and Congressional officials for short-term aid for itself, suppliers and airlines as the outlook for the travel industry worsens by the day because of the coronavirus outbreak, Bloomberg News reported. The U.S. planemaker is seeking to avoid layoffs and damage to hundreds of smaller companies that make parts and systems for its aircraft, said the people, who asked not to be named because the talks are private. Boeing has also been buffeted by the grounding of its best-selling 737 Max, which awaits regulatory clearance to resume flights after two deadly crashes. Boeing, European rival Airbus SE and a constellation of suppliers are navigating the sharpest industry downturn since at least the 9/11 terrorist attacks as nations close borders and airlines ground fleets of aircraft. Airbus today said that it would pause production and assembly at French and Spanish plants for the next four days to put in place health measures, including cleaning and self-distancing. The aerospace sector faces “extreme disruptions” in the near term and possibly beyond, Ron Epstein, an analyst with Bank of America Corp., said in a report to clients Monday. In a statement, Boeing confirmed that “ongoing, positive discussions continue with government and industry leaders” —  including in the Trump administration and Congress. Near-term access to public and private funds is key for the entire aerospace industry, which has a strong long-term outlook but an “urgent challenge” from the virus, the company said. “Short-term access to public and private liquidity will be one of the most important ways for airlines, airports, suppliers and manufacturers to bridge to recovery,” Boeing said in the statement. “We appreciate how the administration and Congress are engaging with all elements of the aviation industry during this difficult time.”

Plunging oil prices and the economic fallout from the global coronavirus outbreak are setting the stage for a potential wave of debt restructurings and bankruptcies, especially in the energy and services sectors, according to company advisers and analysts, Reuters reported. Oil prices dropped by a third over the weekend after Saudi Arabia discounted its crude and signaled it would raise output, fueling concerns about the survival of heavily indebted oil and gas exploration and production companies. Credit investors pulled money out of the riskiest energy bonds, widening the spread of U.S. junk-rated energy debt over safer Treasuries to the highest since March 2016, the ICE/BofAML U.S. high yield energy index showed. Oasis Petroleum Inc, Chesapeake Energy Corp and Whiting Petroleum Corp were among those hardest hit, with their stocks and bonds losing as much as half their value. “This weekend’s developments in the oil market represent a strong additional headwind that will lead to further repricing in risk as well as increasing defaults and downgrades,” Credit Suisse credit analysts wrote in a research note this week. At the same time, the spread of coronavirus around the world continues to roil global markets and unnerve investors. On Monday, Wall Street suffered its biggest one-day stock market loss since the 2008 financial crisis, only to recoup half of the losses yesterday. Debt-laden companies in service sectors hit by reduced tourism and discretionary spending, such as airlines, cruise lines, movie theaters, gaming companies and hotel chains, are particularly vulnerable, according to Fitch Ratings and restructuring experts. Read more.

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As the markets rage and more businesses reel from the impact of the spreading coronavirus, President Trump plans to meet with officials from the nation’s banks at the White House on Wednesday afternoon, the New York Times reported. The meeting, which is scheduled for 3 p.m. ET, is expected to be attended by top executives of the biggest banks, including David Solomon, the chief executive of Goldman Sachs; Brian Moynihan, chief executive of Bank of America; Charles Scharf, the chief of Wells Fargo; Gordon Smith, the co-president and chief operating officer of JPMorgan Chase; and Michael Corbat, chief executive of Citigroup. The bank executives are preparing to address questions on their views of the recent market volatility, the funding of small businesses and their own economic outlooks, according to some of the bank officials who have been briefed on the plans. Hundreds of businesses, small and big, have been hit by the coronavirus outbreak, which has so far infected more than 116,000 people in some 103 countries. Airlines have cut service, signaling that ticket sales are falling as the epidemic spreads. Restaurants, retailers and other small businesses are seeing fewer customers. Supply chains of manufacturing companies have been disrupted since the outbreak started in China — home to many factories that make products for American businesses.

The coronavirus has suddenly and unexpectedly created the biggest challenge for the global airline industry since 9/11, the Wall Street Journal reported. Bookings around the world are falling sharply. U.S. carriers are following Asian and European airlines in cutting flights, grounding planes and enacting draconian cost reductions, such as hiring freezes and unpaid leave. Foreign airlines are looking for help from governments, banks and investors. Major airlines are trying to reassure passengers with promises of scrubbed cabins, filtered air and free-flowing hand sanitizer. The International Air Transport Association, a trade body, estimates the virus could reduce passenger revenue world-wide this year by between $63 billion and $113 billion, or as much as 20 percent. As recently as last month, the trade group was forecasting a hit of less than $30 billion. The coronavirus has grounded 2,000 aircraft around the world, analysts at Jefferies estimate. By comparison, the Sept. 11, 2001, terrorist attacks cut airline revenues by 7 percent, or $23 billion, according to IATA. An eruption of an Icelandic volcano, which severely curtailed trans-Atlantic and European flying for six days in 2010, cost the industry $1.7 billion in lost revenue. Read more. (Subscription required.) 

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Britain’s Flybe collapsed yesterday after a plunge in travel demand, making the long-struggling regional airline one of the first big corporate casualties of the coronavirus outbreak, Reuters reported. The failure of an airline that connects all corners of the United Kingdom with major European destinations not only puts around 2,400 jobs at risk but could also see some airports struggle and regional economies hit. “All flights have been grounded and the UK business has ceased trading with immediate effect,” Flybe said after the government walked away from a rescue package agreed in January. Airlines around the world have been cancelling flights and warning of a hit to profitability after coronavirus first emerged in China, hitting flights across Asia, before it spread to Europe and beyond. Flybe’s collapse will also cause more problems for Prime Minister Boris Johnson who had promised to “level up” Britain by investing in regional transport links. His government had agreed a rescue deal for the 41-year-old airline in January, saying it was important to maintain connections across the country for its eight million passengers. It said yesterday that there was nothing more it could do.

Air Italy’s investors agreed yesterday to place the struggling Italian carrier into liquidation, the airline said citing “persistent and structural market problems,” Reuters reported. The decision was taken “unanimously,” the carrier said, but in a separate statement Qatar Airways, which holds a 49 percent stake, said that it would have been ready to support the relaunch and growth of the airline. Formerly known as Meridiana, Air Italy is the country’s second-largest airline, behind Alitalia. Regional carrier Alisarda, controlled by the Aga Khan, owns the remaining 51 percent. Under current rules, foreign investors cannot own more than 49 percent of a European airline.