Top Transportation Dem warns airlines could face financial hit 'worse than 9/11'

Top Transportation Dem warns airlines could face financial hit 'worse than 9/11'
© Greg Nash

The head of the House Transportation and Infrastructure Committee warned colleagues Monday that the airline industry is expected to take a financial hit amid the coronavirus outbreak worse than the one it endured following the Sept. 11, 2001 terror attacks, according to two Democratic sources familiar with the call.

Chairman Peter DeFazioPeter Anthony DeFazioDemocrats to probe Trump's replacement of top Transportation Dept. watchdog Donald Trump is proposing attacks on Social Security and seniors; here is what we should do instead House committee investigating Carnival cruise line's response to coronavirus MORE (D-Ore.) in a conference call warned caucus members that he anticipates some major U.S. airlines to go bankrupt within six weeks as the country continues to shut down amid the outbreak, warning the industry faces a "worse than 9/11" hit, one source said.

DeFazio “talked about making sure any assistance to airlines puts workers first, and there should be conditions to ensure assistance isn’t used for CEOs or stock buybacks,” said a third source, who was on the call.

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DeFazio's remarks come at a time when both Congress and the White House are weighing actions to help keep the multi-billion dollar industry afloat.

Airline groups are calling for the government to step in and help the hard-pressed companies, which have experienced a sudden drop off in travel in addition to forced cancellations of thousands of flights as the pandemic spreads inside the U.S.

Lobbying group Airlines for America (A4A) on Monday pressed Congress and the Trump administration to provide $50 million in assistance as the industry grapples with the quickly spreading coronavirus epidemic. A4A said the aid would would go towards providing grants, loans and tax relief to get the airlines through the crisis both in the short term and the longer term.

“This is a today problem, not a tomorrow problem. It requires urgent action,” A4A President and CEO Nicholas Calio said in a press release.

The International Air Transport Association (IATA), a trade association that says it represents 82 percent of total air traffic, predicted that global airlines will lose between $63 billion and $113 billion in sales from the outbreak, depending on the speed with which the virus is contained.

The financial toll on the airlines is also on the White House's radar.

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“We’re going to back the airlines 100 percent,” President TrumpDonald John TrumpBiden slams Trump in new ad: 'The death toll is still rising.' 'The president is playing golf' Brazil surpasses Russia with second-highest coronavirus case count in the world Trump slams Sessions: 'You had no courage & ruined many lives' MORE said in the White House briefing room. “We’re going to be in a position to help the airlines very much.”

“We don’t see the airlines failing, but if they get into a cash crunch we’re going to try to help them,” White House economic adviser Larry Kudlow said earlier on Monday.

Kudlow dismissed calling the assistance a “bailout,” instead describing it as more of a short-term liquidity issue. And he noted that a lot of airlines had been in contact with the administration about "their balance sheets."

To deal with the virus outbreak, airlines have cut back both on international flights and domestic capacity as experts warn that traveling could increase an individual's risk for contracting the disease.

"Crowded travel settings, like airports, may increase your risk of exposure to COVID-19, if there are other travelers with COVID-19," the Centers for Disease Control and Prevention's website says.

American Airlines, for example, has cut back on international flights by 75 percent until May and reduced its domestic capacity by 20 percent.

Delta Air Lines temporarily sidelined 300 planes from operation, "the largest capacity reduction in Delta’s history" CEO Ed Bastian said in an internal memo.

Such adjustments come at a time when officials are working to contain the spread of the rapidly spreading virus. There are least 3,927 confirmed coronavirus cases in the U.S., according to a New York Times database.

—Scott Wong contributed.