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U.S. airlines warn on travel recovery while awaiting fresh aid

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(C) Reuters. Travelers sit in a lounge area as Delta Air Lines plane park at a gate in McCarran International Airport in Las Vegas

By Tracy Rucinski and David Shepardson

(Reuters) – Major U.S. airlines warned on Wednesday that travel demand will continue to languish until there is a widespread COVID-19 vaccine, while awaiting developments in Washington for additional federal aid.

U.S. airlines received $25 billion in payroll grants under the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March and have been lobbying for a six-month extension to protect tens of thousands of jobs that are at risk when the first round expires this month.

Union leaders met with senior congressional Democrats to discuss a second round of aid after a proposal from the Republican-led U.S. Senate on Tuesday for additional coronavirus relief did not include new government assistance for U.S. airlines or airports.

Republicans and Democrats have been jockeying for months over the next phase of coronavirus aid. Discussions are expected to accelerate in the coming weeks, officials said, though it was not clear whether an agreement would be reached before the first $25 billion runs out this month.

Airlines continue to suffer a drastic downturn in demand due to the coronavirus pandemic, with the largest carriers each burning through around $1 billion of cash each month.

The sector does not expect a meaningful recovery until there is a widely accepted COVID-19 treatment or vaccine, which could stimulate pent-up demand and the need for trained workers.

United Airlines forecast a bigger drop in third-quarter passenger revenue than its previous expectation, but separately said it had reached an agreement in principle with its pilots union that could save up to 2,850 jobs at risk of furlough.

American Airlines (NASDAQ:AAL) said it could apply for more Treasury loans if other airlines do not take their share of a separate $25 billion available under the CARES Act.

Southwest Airlines (NYSE:LUV), for example, has already said it is not applying for the government loans.

American, with the largest debt load of its peers, is also discussing with Boeing (NYSE:BA) Co deferring the delivery of 18 737 MAX jets and eyeing other options to restore its balance sheet, Chief Financial Officer Derek Kerr said at an industry conference that was held virtually.

American’s shares lost 5%.

Speaking at the same conference, Delta Chief Financial Officer Paul Jacobson warned that any coronavirus vaccine must be followed by broad vaccinations, a process he said could take between six and 12 months.

The global race for a coronavirus vaccine suffered a setback on Wednesday when AstraZeneca (NYSE:AZN) Plc suspended its global trials after an unexplained illness in a participant.

U.S. airlines warn on travel recovery while awaiting fresh aid

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