Rescue prep

11 March 2020 By Antony Currie Follow @AntonyMCurrie

Donald Trump wants to help airlines weather the hit from Covid-19. Unlike cruise lines, also on his list, that makes sense. Some carriers, like Delta and United, may not need aid. But taxpayer rescues can work with the right structures. Breakingviews offers a bluffer’s guide.

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U.S. President Donald Trump on March 10 met with Republican Senate leaders to discuss options for an economic stimulus. He told lawmakers he wanted to temporarily bring the payroll tax rate to zero. The average payroll tax rate for a person who makes $40,000 was 8.8% in 2019, according to the Tax Foundation.

Speaking at the White House on the same day, Trump also said the government would help both the cruise-ship and airline industries cope with the business impact of Covid-19.

Top executives of American Airlines, Delta Air Lines and United Airlines on March 10 unveiled plans to combat the drop in revenue and earnings as a result of the coronavirus, including capacity reductions, delays in capital expenditure, suspending stock buybacks, and adding to available debt facilities.

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