Groundhog Day was last week, but the airlines in the U.S. are still seemingly stuck in a repetitive cycle as the effects of the pandemic continue to plague their business.
What may come as a surprise, though, is that each of the major U.S. carriers is flush with cash.
As a CNN Business story explained, it’s like a family struggling with credit card debt being inundated from other companies with offers to open new accounts.
The sharks are circling, but the airlines are kicking the can down the road through various forms: selling bonds, borrowing money, selling additional stock and mortgaging their planes.
The CNN Business story reported American, Delta, United and Southwest had $31.5 billion in cash at the end of 2020, up from $13 billion a year earlier. Including that cash and those yet-to-be opened credit lines, the airlines are able to access nearly $65 billion.
“The liquidity is at record levels,” said Philip Baggaley, chief credit analyst for the airline industry at Standard & Poor’s. “That’s good, and it’s one of the few strong points they have at this point.”
According to CNN Business, the airlines’ borrowing actions have served to add up to $40 billion in long-term debt.
The well-documented human toll continues. American Airlines sent an email last week to more than 13,000 employees about potential layoffs because the predictions of a big summer comeback for travel are losing steam.
In late January, United Airlines issued a similar warning to 14,000 employees even as the travel recovery is likely to begin sometime late this year.
“I think the general feeling is they’re wounded but they’re going to make it,” said Baggaley.