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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.

The coronavirus brought an end to the longest economic expansion in U.S. history, but that’s wasn’t the only problem: When the U.S. barreled into the deep downturn that followed, it was laden with debt, according to a Wall Street Journal analysis. All told, the borrowing, spurred by years of low interest rates, adds up to $64 trillion in consumer, business and government debt, more than triple the country’s gross domestic product. The series of charts below illustrate how we got here and what it means for any recovery. The most important piece of a recovery is consumer spending, which accounts for nearly 70% of the U.S. economy. High household debt levels tend to lengthen recessions and amplify their severity, according to a study of advanced economies over 30 years by researchers at the International Monetary Fund. Economic growth over the past decade — including big gains in the stock market and in U.S. home prices — has benefited wealthier households the most, while those with lower incomes fell behind. Real median household income fell after the financial crisis and didn’t surpass the inflation-adjusted 1999 record of $61,526 until 2016. Mortgage debt, mostly held by better-paid workers, hasn’t changed much. Lower-income households, by contrast, have increased their borrowing with auto loans, student debt and credit cards. Before the pandemic, the percentage of delinquent auto-loan balances had nearly reached levels last seen in the financial crisis. Businesses have also borrowed at a record pace in recent years, leading some economists to raise alarms last year that high levels of corporate debt during a recession could force companies to slow spending and hiring to repay what they owe — or get simply overwhelmed by their repayments. Rather than use cash to invest in their businesses, many companies bought back stock to boost share prices. Buybacks hit a record $806 billion in 2018, following the tax overhaul that lowered rates for many companies.

A group of high-profile directors — including Clint Eastwood, Sofia Coppola, Martin Scorsese, Christopher Nolan and Lee Daniels — is calling on Congress to help movie theaters hit by the coronavirus pandemic, saying that without some financial relief, the cinemas "may not survive," The Hill reported. More than 70 directors, producers and writers signed a letter sent on Wednesday to Senate Majority Leader Mitch McConnell (R-Ky.), Minority Leader Charles Schumer (D-N.Y.), House Speaker Nancy Pelosi (D-Calif.) and House Minority Leader Kevin McCarthy (R-Calif.), along with the National Association of Theater Owners, the Directors Guild of America and the Motion Picture Association. Movie theaters, the letter states, are in "dire straits" due to COVID-19. Cinemas closed their doors earlier this year as the pandemic spread across the country, with movie studios pushing back release dates for many films. Several chains have since reopened with limited capacity. The letter says 93 percent of movie theater companies suffered from more than 75 percent in losses in the second quarter.

Two Illinois communities are getting a lesson in the dangers of relying too heavily on one taxpayer as Exelon Corp. prepares to close a pair of nuclear power stations next year, eliminating thousands of well-paying jobs and eviscerating local budgets, Bloomberg News reported. Illinois’s largest electric utility announced in August it will close a money-losing plant near Byron next September and its Dresden generating station a hundred miles away two months later. The company blames federal regulators for changing rules and making nuclear power less competitive in the biggest U.S. regional power market, which stretches across 13 states. Illinois Governor J.B. Pritzker has indicated he’s not going to let one company that’s looking for more subsidies dictate energy policy in his state. The shutdowns underscore the deep financial risk to small communities with economies tethered to single employers or industries, a dependence that’s likely to get increasingly perilous nationwide as the deepest recession since World War II drives a wave of corporate bankruptcies. Carlton, Wis., lost almost 70 percent of its revenue when a nearby nuclear plant was shut in 2013. The Byron Community Unit School District 226, about 96 miles (154 kilometers) west of Chicago, relies on the local Exelon plant for about three fourths of its property taxes. Revenue from the stations also funds libraries, fire districts and forest preserves. “It would be devastating,” said Buster Barton, superintendent of the school district, where roughly a quarter of the almost 1,500 students are low income. Exelon and other nuclear operators have shut at least 11 U.S. reactors since 2013 and pressed legislatures for subsidies to keep others running. New York, New Jersey and Connecticut implemented subsidies to keep stations open. Exelon closed its Three Mile Island facility in Pennsylvania last year after a proposed bailout bill foundered.

The Denver franchisee of wholesale flooring retailer ProSource has filed for chapter 11 bankruptcy, Floor Daily reported. ProSource of Denver reported in a filing that it owes between $1 million and $10 million to between 100 and 200 creditors. The company said it has assets in the same range. A later section of the filing indicates that the company owes approximately $3 million to its 20 largest creditors. Attorney Jamie Buechler of Denver-based Buechler Law Office, who is representing the company in bankruptcy proceedings, said that it had more than $10 million in sales in 2018, but was set back after a former employee was caught stealing last year. Things got worse with the pandemic as sales and cash flow began to slow down, she said.

The XFL, which was acquired over the summer by Dwayne Johnson, Dany Garcia and RedBird Capital Partners, says it will not play in 2021 but plans to return in 2022, Deadline.com reported. “It’s an uphill battle,” Johnson wrote in a tweet, “but we’re hungry, humble and no one will outwork us.” The upstart off-season rival to the NFL, a reanimated version of the one created by NBC and wrestling magnate Vince McMahon two decades ago, got a few weeks into its season before COVID-19 struck the U.S. McMahon funneled some $200 million into the effort to revive the league, but it declared bankruptcy in the spring. The new owners picked it up for just $15 million. In addition to the pandemic, which has limited fan attendance at football games and created logistical complications for teams and leagues, emerging from bankruptcy is a tall task for the new owners. Many former coaches and league employees are listed as creditors in the bankruptcy proceedings, presenting challenges in terms of ramping back up quickly. Former commissioner Oliver Luck has filed a $23.8 million wrongful termination lawsuit against McMahon. 

The worst economic crisis in more than a generation has thrust potentially millions of Americans across the country into a sudden peril: Cash-strapped, and in some cases still unemployed, they have fallen far behind on their electricity, water and gas bills, staring down the prospect of potential utility shut-offs and fast-growing debts they may never be able to repay, the Washington Post reported. At the start of the coronavirus pandemic, many states acted quickly to ensure their residents would not lose their power or other utilities if their jobs or wages were slashed. Now, however, only 21 states and the District of Columbia still have such disconnection bans in place. That leaves roughly 179 million Americans at risk of losing service even as the economy continues sputtering, according to the National Energy Assistance Directors’ Association, which is tracking the moratoria. Millions more in nine other states are set to lose their protections starting Thursday and throughout the fall, the group found.

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.