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By Alison Sider in Chicago and Ted Mann in Washington 

Reeling from the coronavirus crisis, U.S. airlines are seeking over $50 billion in financial assistance from the government, more than three times the size of the industry's bailout after the Sept. 11 attacks.

The exact form of the aid -- and the amount -- is under discussion with Trump administration officials and congressional leaders. A potential aid package could include government-backed loans, cash grants and other measures including relief from taxes and fees, according to an airline trade group and others familiar with the discussions.

"We're going to back the airlines 100%," President Trump said at a news conference Monday. "We have to back the airlines. It's not their fault."

Industry trade group Airlines for America, or A4A, also proposed $8 billion in grants and guarantees for cargo carriers. U.S. airports are separately seeking $10 billion in assistance to counter forecast full-year losses already approaching $9 billion, according to a person familiar with the request.

Airlines are facing an existential crisis, with United Airlines Holdings Inc. alone estimating its revenue would be down $1.5 billion in March from a year ago and would post a first-quarter loss. A4A said all seven of the carriers it represents could run out of money in the second half of the year or sooner.

"We cannot afford to wait long for assistance," A4A said.

Airlines have been stunned by the rapid plunge in their bookings as the coronavirus pandemic has spread around the world. As the worst-case scenarios they envisioned just days or weeks ago have come to pass, carriers have scrambled to make ever deeper cuts to their schedules.

Major carriers have warned the administration they could become insolvent as soon as late May without federal help, a person familiar with the talks said.

The proposed aid package would require congressional approval, and some lawmakers in both parties have already begun signaling opposition to what they called a corporate bailout.

"The Swamp will draft a COVID19 corporate bailout. It will not be good," Rep. Matt Gaetz (R., Fla.) wrote on Twitter Monday, referring to the illness caused by the novel coronavirus.

Sunday night on Fox News, Rep. Gaetz said "every lobbyist in Washington right now is planning for the next big bailout push, whether it's the airline industry or the cruise industry....We do not need a massive corporate bailout as a consequence of this virus. We should be thinking about the workers."

Sen. Edward Markey (D., Mass.) said any assistance to the airlines should come with new rules prohibiting practices like charging for flight changes as well as protection for workers.

"Any infusion of money to the airlines must have some major strings attached," he said in a statement. "I will demand these conditions be met before supporting any airline bailout."

Treasury Secretary Steven Mnuchin said Sunday that the administration was considering relief packages for a number of industries but rejected the idea that they would constitute bailouts.

"If you're providing liquidity to good businesses that just need liquidity for three to six months, where you're taking collateral and you have security, that's not a bailout," he said.

Senior leaders at Boeing Co., meanwhile, have been in talks with congressional and White House officials about financial assistance for the plane manufacturer and its suppliers, as part of a broader aid package for the aviation industry, a company executive said Monday.

"We can get the aviation sector back on its feet faster if there is assistance," the executive said. Details of any potential request for assistance couldn't immediately be learned.

Boeing continues to build wide-body aircraft at its Everett, Wash., factory near Seattle, while production of the narrow-body 737 MAX remains halted amid a protracted grounding following two deadly crashes.

United said Sunday night that it would cut its planned flying in half in April and May and is in talks with its unions about steps that could include furloughs, pay cuts or other measures to reduce payroll expenses.

Even then, the carrier expects its remaining planes to fly only a quarter full.

"When medical experts say that our health and safety depends on people staying home and practicing social distancing, it's nearly impossible to run a business whose shared purpose is 'Connecting people. Uniting the world,'" United CEO Oscar Munoz and President Scott Kirby wrote in a letter to employees Sunday.

Delta Air Lines Inc. and American Airlines Group Inc. have also announced severe cuts in flying, hiring freezes, and voluntary unpaid leave for employees.

A4A issued its proposal for more than $50 billion in aid publicly Monday after circulating it privately in recent days. While massive, the aid package falls short of the $80 billion bailout of the auto industry following the 2008 financial crisis.

The trade group argued that roughly half of the proposed assistance -- $25 billion -- should come in the form of direct grants to airlines. The proposal also outlines a $25 billion program in which the Federal Reserve would purchase financial instruments from, or provide interest-free loans or loan guarantees to, the carriers.

It also includes provisions for rebates of excise taxes -- including those on tickets, cargo and fuel -- that airlines paid in the first quarter and a repeal of those taxes through at least Dec. 31, 2021.

Some lobbying on behalf of the airlines believe that figure might not be enough, given the likelihood that the disruption to air travel will last for months, leaving carriers with huge debt loads and depressed cash flows.

"They might be shooting too low," one person involved in the talks said.

The Trump administration is using the post-Sept. 11 bailout passed by Congress in 2001 as a template for the current talks with carriers, people involved in the discussions said.

Lawmakers in 2001 made $5 billion in direct payments to airlines after the terrorist attacks that prompted a three-day closure of North American airspace. They also earmarked up to $10 billion to support U.S. airlines through a loan program, though only $1.56 billion in guarantees were authorized, including to carriers that ended up failing.

Some criticized that package for propping up ailing carriers and delaying consolidation. The program ended up making money for the government.

U.S. airlines were profitable for a decade before the virus hit -- a record stretch -- and airline executives had hoped they had built up enough of a cushion to make it through the hit from the virus.

But as governments imposed sweeping new restrictions on international travel and passengers began canceling flights en masse, the speed and severity of the drop in demand has been overwhelming.

Airlines are also arguing that they should be permitted to retain the 7.5% tax on ticket sales that currently goes to support airport improvements. That has triggered fights with airport operators that say they depend on that revenue, this person said.

Airlines have bolstered liquidity in recent weeks with bond issues and by drawing down existing credit facilities. Alaska Air Group Inc. said Monday it was seeking another $500 million, having drawn down a loan just last week.

Executives have also flagged their access to potentially billions of dollars more by borrowing against aircraft and other assets such as frequent-flier programs.

U.S. airline shares have more than halved in value over the past month and continued their decline on Monday, rising only slightly after the aid request was disclosed. The NYSE Arca Airline Index fell 16% to its lowest level in seven years.

United's Mr. Munoz and leaders of unions representing the airline's flight attendants, pilots, mechanics and flight dispatchers wrote to Mr. Mnuchin and congressional leaders Monday asking for financial support, saying that the recent travel restrictions and shrinking demand were putting jobs at risk.

"The financial impact of this crisis on our industry is much worse than the stark downturn that we saw in the aftermath of the 9/11 attacks," they wrote in a letter. "Financial support that you provide would allow United to continue paying our employees as we weather this crisis -- protecting tens of thousands of people from imposing a temporary furlough."

--Andrew Tangel, Doug Cameron and Alex Leary contributed to this article.

Write to Alison Sider at alison.sider@wsj.com and Ted Mann at ted.mann@wsj.com

(END) Dow Jones Newswires

March 16, 2020 19:43 ET (23:43 GMT)

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