Global demand for air travel has reached an all-time low, with revenue falling by 90 percent on airlines such as American. Executives of the company said the coronavirus pandemic had a far greater effect on the industry compared to the impact the terror attacks of September 11 had.
Regardless of the coronavirus pandemic, the recent decline in demand for air travel appears to be as bad as it can get, American Airlines chief executive officer Doug Parker revealed on Wednesday.
"It definitely feels like we are at the bottom," Parker told CNBC. American Airlines's income is down 90 percent year-on-year, and "it's been like that for a few weeks now," he said. The CEO added that the real question is now is "how long you are stuck at the bottom, and when we start recovering."
American and other major U.S. carriers, including Southwest, Delta and JetBlue, reported on Tuesday deals with the US Treasury Department about their $25 billion share of government grants and low-interest loans.
But despite the assistance, airline bosses expect a grim scenario for their companies, warning that demand for travel has all but evaporated, saving the airlines' cash as they struggle to pay fixed costs with the fewest passengers taking to the skies in as many years.
American Airlines will get government funding worth $5.8 billion to pay its workers, as the carrier reported on April 14. The airline entered a group of others to pursue government bailout in the midst of a rapid downturn in earnings and revenues.
As of Wednesday, after the Coronavirus Support, Relief, and Economic Security (CARES) Act has been passed, American Airlines will receive the federal relief to pay its personnel.
The assistance is to be split up into two batches: $4.1 billion would come in the form of a Federal government direct aid, while the other $1.7 billion will be provided in the form of a low-interest loan.
American Airlines will lay down additional terms of the aid when it files an update with the Securities and Exchange Commission.
Parker said that given the severity of the airline industry's coronavirus epidemic, there is reason to be hopeful that travel will bounce back as the tragedy winds down.
During a Wednesday interview on CNBC's Squawk Alley, Parker said the airline has seen an upsurge in potential sales of travel tickets for more than 90 days in recent days.
Meanwhile, American Airlines continues to plan for the coming months, such as not deferring new jet orders like the Boeing 737 Max and retiring planes like the Boeing 757s and 767s.
