Airlines Are Rolling in Cash Even After Huge Losses in 2020
As the pandemic drags on, airlines continue to lose money. Travel demand is still slow, and has yet to reach even 50% of pre-pandemic levels. But, while domestic airlines lost billions in 2020, they also ended the year with lots of cash in hand.
CNN Business reports that major domestic airlines lost about $32 billion last year, but they have about that same amount in cash, if not more. The nation’s four largest airlines, American, Delta, United and Southwest had $31.5 billion in cash on their balance sheets at the end of 2020. Surprisingly, that’s an increase from the $13 billion they had a year earlier, before the pandemic hit.
“The liquidity is at record levels,” Philip Baggaley, chief credit analyst for the airline industry at Standard & Poor’s, told CNN Business. “That’s good, and it’s one of the few strong points they have at this point.”
The airlines have added cash to their balance sheets by selling bonds, borrowing money, mortgaging planes, frequent flyer programs and other assets, and even selling shares of stock. Airlines have also made big cuts, even with government help that prevented them from making involuntary job cuts. The airlines used buyout packages and early retirements instead.
Airlines received billions in government aid from two relief packages, one in March of 2020 and one in December. They are still seeking $15 billion more to be added to the payroll protection program.
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