Airline executives met with White House Chief of Staff Mark Meadows in a move to push to receive another $25 billion in federal aid to preserve industry jobs through next March. The Final Round panel breaks down the details.
MYLES UDLAND: All right, let's turn our attention now to what's going on in the airline space, and really as it relates to the future of these company's operations. Obviously, we've watched the stocks kind of catch a little bit of a bid here as the reopening trade tries to get underway in some kind of a sustained fashion. But when you look at these stocks compared to their 52-week highs-- American, United, Southwest, all off-- or I should say United and American off more than 50% from their 52-week highs. Southwest, less levered to the business traveler, that stock is off about 60%. Delta down about 45%.
But you know, September is-- is wrapping up here. And we all remember back as a condition of that bailout money a number of these airlines got in the spring that they could not make any layoffs or significant staff moves through the end of the third quarter. Well, that is now less than two weeks away.
And I think as we watch things like TSA traveler data kind of flatline, and you think about what is the right staffing level, Seana, I kind of-- you know, when we talked about this story-- or I was thinking about this story earlier today, I sort of was struck by how little, perhaps, I had been thinking about what the future of these businesses is like, because there was that conditional bailout, and then so much optimism through the summer around the return of these TSA numbers. And yet here we are in October still looking at basically a post 9/11 type scenario for these businesses.
SEANA SMITH: Yeah, we certainly are. And when we take a step back and just try and kind of just realize the trouble that the airline business is in, it's almost too much to comprehend at this point. So they got that initial bailout package back in March, and things have not improved, like you said. When you take a look at the TSA numbers, when you take a look at the passenger level numbers, they're still down, what, between 65% and 75% then they were a year ago.
So we talk about the fact that there is just so much revenue lost over the last several months, and it's not showing any end in sight. We've all read survey after survey, just trying to gauge the public's interest in terms of taking trips, whether or not they're willing to travel, whether or not they're willing to get on planes, and I think there is still a lot of hesitation out there.
And because of that, these US airline CEOs, they're almost out of options. They met with Mark Meadows earlier today. They're pleading for another coronavirus relief package. Like you said, they're only two weeks away from that deadline. If they don't get anything by October 1, there will be tens of thousands-- potentially tens of thousands of layoffs within this sector.
These companies are going to be forced to downsize because they simply just cannot keep the number of employees that they have today on their payrolls. And you can see that by Delta's move today. I mean, Delta making it clear that they need liquidity, now upsizing the money that they're borrowing against the frequent-flyer program, upping it to $9 billion. It was just over $6 billion. So it's the largest debt offering in airline history, and it's stressing the need-- the need for liquidity and right now that so many of these airlines obviously have been struggling with over the last several months.
And when you take a look at the fact that they're pleading for it, the fact that they need it right now, the underperformance of these airlines, I mean, this is a sector that needs bailout help. And one other thing, Myles, that I was noting, I was looking this up as you were coming to me, but the market cap of these companies compared to some of the tech giants, or even some of the other outperformers like Nvidia, I mean, when you take a look at United, for example, the market cap there is $10 billion. So I mean, this is an industry where you start to almost question the business model, does it make sense? It's clearly not working, and maybe they need to almost throw it out the window, start from scratch. And we probably will see real change, hopefully we will see real change in this industry.
DAN ROBERTS: And guys, just to add to what Myles was saying, it was funny, Myles, when you said it, you sort of hadn't thought in a while about how much the airlines are struggling. It's true. And if you think about it, I mean, seven months not at their usual capacity, and, you know, five of those months at severely decreased capacity, what other business could survive this? I mean, what other industry could actually get through this without a bailout?
And as Seana mentioned, even having had the first bailout, they're still in mega, mega trouble. I can't think of many companies that without a bailout could take six months where their revenue is down however much percent, huge, huge, huge losses. And in fact, even if you now feel comfortable at some point to take a flight somewhere with a mask, with all the wipes, the sanitizing your chair, with being so, so, so super cautious-- and I know some people who say they're comfortable with that, fine-- it's still going to be so long for it to be fully normalized, for people to just be able to book a flight, no problem, without thinking about all those concerns.
Even once the pandemic, you know, is sort of "over," so to speak, it's going to be a long, long, long time before it's really "over," before masks are done, before social distancing is done. You know, there's more, and more, and more pain to come for the airlines. They're not through this, at all.
MYLES UDLAND: Yeah, and I think, you know, the beginning of this pandemic, we were all like this is going to be a multi-year process, and then the summer maybe wasn't quite as bad. And now we're looking at oh, the recovery is actually holding in pretty well. Big upgrade on GDP from the Fed yesterday. But the industries hit hardest, restaurants and airlines, are still, no doubt, looking at a multi-year process here. All right.