American Airlines eyes more Treasury loans; unions meet with top Democrats

(Reuters) – American Airlines said on Wednesday it could seek a larger loan from the U.S. Treasury Department, while airline union leaders were due to meet with senior congressional Democrats regarding a second round of payroll aid for the sector.

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.

The CARES Act also offered airlines another $25 billion in loans. American is taking $4.75 billion of that pot, and its chief financial officer said it could apply for more if other airlines do not take their share.

Southwest Airlines, for example, has already said it is not applying for the government loans.

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

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

American has the largest debt load of its competitors and said on Wednesday it is discussing with Boeing Co deferring the delivery of 18 737 MAX jets.

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 but is considered a starting point for talks with Democrats.

The global race for a coronavirus vaccine suffered a setback on Wednesday when AstraZeneca Plc suspended its global trials after an unexplained illness in a participant, and Delta Chief Financial Officer Paul Jacobson warned that any vaccine must be followed by broad vaccinations, a process he said could take between six and 12 months.

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