Pelosi Floats New Stimulus Plan: Rolling Back SALT Cap

A proposal to retroactively lift a limit on state and local tax deductions would largely funnel money to relatively high earners in high-tax states.



By Jim Tankersley and Emily Cochrane

WASHINGTON — As lawmakers prepare for another round of fiscal stimulus to address economic fallout from the coronavirus pandemic, Speaker Nancy Pelosi suggested the next package include a retroactive rollback of a tax change that hurt high earners in states like New York and California.

A full rollback of the limit on the state and local tax deduction, or SALT, would provide a quick cash infusion in the form of increased tax rebates to an estimated 13 million American households — nearly all of which earn at least $100,000 a year.

In an interview with The New York Times, Ms. Pelosi said the next phase of an economic rescue package should include additional measures to get more money directly to individuals — like the $1,200 direct payments for low- and middle-income taxpayers that were authorized in the $2 trillion bill that President Trump signed on Friday.

That could be achieved, she said, by having Congress “retroactively undo SALT,” a reference to a cap on the state and local tax deduction that Republicans included in their 2017 tax overhaul. That limit prevents households from deducting more than $10,000 a year in state and local tax expenses from their federal tax bills.

Henry Connelly, a spokesman for Ms. Pelosi, said on Monday evening that she was proposing something narrower than a full SALT rollback, and that any change would be “tailored to focus on middle-class earners and include limitations on the higher end.”

“We could reverse that for 2018 and 2019 so that people could refile their taxes” and receive more money back from the government, Ms. Pelosi said in the interview. “They’d have more disposable income, which is the lifeblood of our economy, a consumer economy that we are.”

In the 2018 midterm elections, Democrats wielded the SALT limits in House campaigns against Republicans in wealthy blue-state suburbs of cities like New York, Los Angeles and Chicago. Democrats voted last year to repeal the cap, but the effort died in the Republican-controlled Senate.

Republicans called the effort hypocritical, saying that it would primarily benefit wealthy households in high-tax states. Democrats had roundly denounced the 2017 law, which included rate cuts for businesses and individuals, as a handout to the rich. But the SALT deduction overwhelmingly benefits high earners.

The congressional Joint Committee on Taxation estimated last year that a full repeal of the SALT limit for 2019 alone would reduce federal revenues by about $77 billion. Americans earning $1 million a year or more would collectively reap $40 billion of those benefits. Most of the rest would go to households earning $200,000 or more.

That is a contrast with the bill Mr. Trump signed on Friday, which began to phase out direct payments for households earning $150,000 or more.

Ms. Pelosi’s proposal represents “the way to get money into the hands of people who don’t benefit from the $1,200 checks because they make too much money,” said Kyle Pomerleau, a resident fellow at the conservative American Enterprise Institute. “It certainly gets money into hands. But I’m not sure it’s the correct hands.”

Many liberal economic policy analysts also oppose lifting the SALT cap, calling it regressive tax policy. Seth Hanlon, a senior fellow at the liberal Center for American Progress, said the same logic was also a reason not to lift the limit in the next economic rescue bill. That is particularly true because consumption data show that low- and middle-income Americans are more likely than higher earners to spend benefits from the government immediately and stimulate economic activity.

To continue with direct assistance, Mr. Hanlon said, “there are ways you could target it to truly middle-class people. The problem is, relatively few middle-class people claim SALT.”

The Tax Policy Center estimates that only 3 percent of households in the middle quintile of American taxpayers would receive any benefit at all from the SALT cap repeal.

“In and of itself,” Mr. Hanlon said, “it doesn’t strike me as the most effective way of targeting economic stimulus

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Macy's to furlough nearly 130,000 employees as virus keeps stores shut

(Reuters) – Macy’s Inc (M.N) said on Monday it would furlough most of its employees starting this week as all stores of the department chain operator stay closed to curb the spread of the coronavirus.

The company, which has about 130,000 employees, earlier this month shut its more than 800 stores, suspended quarterly dividend and withdrew its 2020 forecasts. It has also drawn down all its available credit and frozen hiring and spending to offset the impact of the pandemic on sales.

Retailers such as Nordstrom (JWN.N) and Gap Inc (GPS.N) have also moved to cut costs in an attempt to cope with the financial strain and uncertainty caused by the outbreak.

“We’ve already taken measures to maintain financial flexibility … While these actions have helped, it is not enough,” Macy’s said in a statement here

Widespread lockdowns to arrest the spread of the outbreak have hammered sales for the retailer as most of its physical stores remain closed, despite the online business staying up and running.

The fast-spreading virus, which has killed about 34,000 people across the globe, has only compounded sales pressure for retailers that were already struggling with stiff competition and a shift to online shopping.

Further underscoring the pandemic’s devastating blow to the U.S. economy, the number of Americans filing claims for unemployment benefits surged to a record of more than 3 million in the week before last.

The economic hit has also prompted the Federal Reserve to take the extraordinary measure of a $2 trillion stimulus package.

Macy’s said on Monday it would maintain the “absolute minimum” workforce needed to maintain basic operations across its Macy’s, Bloomingdales and Bluemercury brands.

At least through May, furloughed employees enrolled in health benefits will continue to receive coverage, with the company covering the premium amount. Employees at a director-level who are not furloughed will receive a pay cut.

The retailer added there would be fewer furloughs in its digital business, which is still operational, supporting distribution centers and call centers.

Macy’s said it planned to keep its stores shut and bring back employees on a staggered basis only once business resumes.

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Coronavirus drives U.S. March auto sales off a cliff

DETROIT (Reuters) – U.S. new vehicle sales likely drove off a cliff in March as the coronavirus pandemic pounded consumer confidence and shuttered dealerships across much of the country, and sales are likely to take a further beating in April as social distancing guidelines remain in place.

“When you look at March, we basically lost half the month,” said Eric Lyman, chief industry analyst at car-shopping website TrueCar.com (TRUE.O).

TrueCar has forecast a sales drop for March of 37 percent and Lyman said sales in April could also be off between 50 percent to 60 percent.

A rebound for the sector will likely depend on how long the crisis lasts and what level of support the U.S. government provides for consumers in the meantime.

Most major automakers, including General Motors Co (GM.N) and Toyota Motor Corp (7203.T), are due to report quarterly U.S. sales on April 1. Ford Motor Co (F.N) and Fiat Chrysler Automobiles NV (FCHA.MI) will report sales on April 2.

Tesla Inc (TSLA.O) also typically reports first quarter deliveries during the week after the quarter ends. Analysts had expected the company to deliver about 93,000 vehicles during the quarter, according to Refinitiv. Tesla Chief Executive Elon Musk on March 19 suspended production at the company’s Fremont, California, assembly plant under pressure from local authorities.

Just how bad March was is an open question. Cox Automotive did not release a monthly forecast, but said its data showed that on March 27, new vehicle sales to consumers fell 55 percent versus the same day in 2019.

In U.S. states under “stay-at-home” orders, sales fell as much as 80 percent to 90 percent, Cox estimated. Those include states like California and New York, home to a large portion of the American car-buying population.

“April will be just as dismal,” said Cox analyst Michelle Krebs.

IHS Markit estimates the coronavirus pandemic will cut full-year 2020 sales by 15.3 percent and globally sales will fall 12 percent – “considerably worse” than the fall in sales during the Great Recession in 2008-2009.

More dealers are embracing online sales, which could help mitigate falling sales.

But U.S. consumer confidence plunged in March to the lowest level since October 2016 as the coronavirus epidemic upended life for Americans.

George Augustaitis, director of automotive industry analytics at CarGurus Inc (CARG.O), an online marketplace for new and used cars, said a rebound in new vehicle sales will depend on government support for workers laid off during the crisis.

“If these consumers are taken care of, we should see the market rebound fairly quickly,” Augustaitis said.

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Find out the most sought after ZIP codes in the Mile High City

After slipping and sliding in the first half of last year, median home prices in metro Denver regained their footing in the second half, rising a modest 2.5%.

But there were pockets with double-digit gains, and they weren’t the usual suspects. The biggest gains came in metro Denver’s most expensive neighborhoods, according to 2019 sales numbers from the Denver Metro Association of Realtors.

“It is still a really good market by any measure. The numbers are still extremely positive,” said Steve Danyliw, a member of DMAR’s market trends committee and a local Realtor, who compiled sales numbers on 90 ZIP codes.

The number of homes and condos sold rose to the second-highest total after 2017. But across the metro area, listings took about five more days on average to sell than they did in 2018.

Overall, median home price gains slowed sharply to 2.5%, down from 7.9% in 2018 and 8.6% in 2017.

But four ZIP codes managed to pull off double-digit gains last year, while 57 of the 90 recorded above-average rates of price appreciation.

The four hottest ZIP codes in 2019 were 80202, 80206, 80135 and 80433, and they all had a median sales price of $550,000 or higher, putting them on the more expensive side.

Downtown and LoDo are within the 80202 ZIP code, where the median price of a home or condo sold rose 16.8% to $590,000. The 334-unit Coloradan near Union Station single-handedly helped push up both the average and median sales prices after it completed construction.

“There isn’t any inventory downtown and any time a new condo building gets built, it sells quickly,” said Dee Chirafisi, founder of Kentwood City Properties. “We saw a lot of high-end projects with a higher price per foot.”

Chirafisi said downtown Denver has a lot of high-income renters who want to own and build equity, a reason why new projects sell quickly. But the supply is limited. There were only 341 sales in 80202 last year, down 9.3% from the number of sales in 2018.

The 80206 ZIP — which covers the Cherry Creek, Congress Park and City Park neighborhoods — had the next highest rate of appreciation at 15.6%, which pushed the median sales price to $715,000, the second most expensive neighborhood after 80209, home to the Washington Park and Belcaro neighborhoods.

After those two pricier Denver areas, the biggest price gains came in the southwestern foothills, with the 80135 ZIP covering Sedalia, Westcreek and Deckers recording a 13.3% jump in the median price of a home sold, although the number of homes sold was comparatively small at 53.

Conifer’s housing market was perhaps the hottest of the bunch last year, pulling off a triple play, with median prices up 12%, sales volume up 10.4% and the average number of days it took a listing to sell down, from 31 to 29.

“The area is growing and there is a desirability to live in the mountains,” said Todd Schroder, a broker associate with Keller Williams DTC, who specializes in mountain properties.

Newcomers to the state may dream of living up in the mountains, but they often fail to appreciate the distances and the commute times involved. By the time they drive up to Bailey, many realize that’s too far a commute for a job that is in the Denver Tech Center of central Denver, Schroeder said.

Another possible explanation is that wildfire fears, which have eased along with drought conditions, aren’t top of mind with buyers, especially the ones who are new to the state.

But strong appreciation wasn’t found everywhere in the foothills. Evergreen home prices rose 1.7%, lagging versus the overall market, and the Golden and Genesee area suffered a 1.4% decline in median prices.

Flipping the script on affordability

In the first quarter of the year, 26 of the 90 ZIP codes were showing price declines year-over-year. By the first half, that number was down to 20 and by the end of the year, only 12 had ended 2019 down. Another two, 80129 and 80223, ended the year flat.

Still, for sellers accustomed to the market moving in one direction — up — accepting that prices could fall didn’t come easy. They continued to list their properties too high and then had to walk it back.

There were two ZIPs with the shared distinction of having the largest percentage decline at 7.1%: 80235 and 80247. The first covers the Marston Slopes and Pinecrest neighborhoods, where the median price of a home sold fell from $256,000 to $237,750. The average number of days that a listing spent on the market rose from 19 to 25.

The second ZIP covers the retirement condo heavy communities of Windsor Gardens and Dayton Triangle. The median price of a condo or home sold there fell from $232,000 to $215,500 and the number of days on average that listings spent on the market surged from 27 to 46.

Driven by a push for affordability, metro Denver’s lowest-priced neighborhoods experienced the biggest gains in price in recent years. Buyers, desperate to find something they could afford, drove up home prices on lower-cost homes and condos, while prices on higher-end properties rose at a slower price.

But in 2018, that momentum showed signs of reversing, and last year the paradigm flipped. The 45 most expensive ZIP codes by price averaged a gain of 3.6% last year, while the most affordable 45 rose by 3.1%. The contrast was even more extreme among the top five and bottom five ZIP codes in terms of median home price.

Prices in the five most expensive areas rose 6.8% last year on average, with one exception: The 80210 ZIP — which covers Platt Park, University Park and Wellshire — was down 3% last year.

The five most affordable areas declined 1.9%, with four of the five areas down on the year. The one exception was Aurora’s 80012 ZIP code, which covers Utah Park, Expo Park and Aurora Hills. Median prices there rose 7.5%, enough to rank seventh overall.

Does that mean buyers have gotten their fill of lower-priced homes and that builders were right all along in targeting the upper end of the market by focusing on more expensive homes?

Danyliw said he doesn’t think so. Demand is still strong for more affordable properties, especially among first-time buyers. And as the millennial generation ages, they move into a better position to buy, which should only boost demand for entry-level properties.

Also, as the most affordable homes got more expensive, they represented less of a value compared to the upper end of the market. The normal gap between the two got compressed, and the market may be trying to restore the gap.

What comes next

Metro Denver’s home market came out of the gates running in January, with strong demand being met by strong supply. New listings nearly doubled in January from depressed levels in December, and buyers were there to swoop all of them up.

The lack of inventory, if it is sustained, could work in favor of the lower end of the market, Danyliw said. He has witnessed the return of multiple bids on properties and shortened sales times.

And there isn’t a sign that high-end markets, especially downtown, are letting up.

Chirafisi said the 103 condos under construction at McGregor Square, next door to Coors Field, were already half sold out before Kentwood, the exclusive broker for the high-end properties, even put up a marketing website.

“It has been all word-of-mouth,” she said.

One way to get at where the hottest areas of 2020 might be is to look at where buyers are most actively scouring online for homes.

The Seattle-based real estate brokerage Redfin did that for neighborhoods across the country and West Arvada ranked fourth overall among the hottest neighborhoods to watch in 2020.

Redfin agent Cory Keach said he suspects buyers who are getting priced out of Denver’s northwestern neighborhoods or who want more space are heading into Wheat Ridge and Arvada.

West Arvada, in particular, offers a more suburban feel with larger yards and more modern homes. He also said the neighborhoods close to Colorado 93 appeal to people who work in Boulder but can’t afford to live there.

“Every house I have put under contract in Arvada has gone above list price,” he said.

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Wall St. gains as investors weigh stimulus against shutdown

(Reuters) – Wall Street rose on Monday as President Donald Trump followed last week’s massive fiscal stimulus package by extending his stay-at-home guidelines, leaving investors hopeful that the economic impact of the coronavirus could still be contained.

A record $2.2 trillion in aid and unprecedented policy easing from the Federal Reserve helped the S&P 500 .SPX post its biggest weekly percentage gain in over a decade last week, and the Dow Jones .DJI its best since 1938.

However, all three major stock indexes fell more than 3% on Friday after the United States overtook China as the country with the most number of coronavirus cases.

The crisis has so far knocked $7 trillion off the value of S&P 500 companies and without any clarity on how long it will take to quell the outbreak, Wall Street’s main indicators of future volatility remain at high levels.

“Massive monetary and fiscal spending is giving investors just enough breathing room to figure out the extent of the economic damage done,” said Stephen Innes, a markets strategist at AxiCorp.

“Prices are tentatively stabilizing and risk is turning back on again as market makers are back replenishing their shopping list of go-to equities.”

Trump on Sunday dropped a hotly criticized plan to get the economy up and running again by mid-April after White House health experts argued strongly to extend the stay-at-home order to curtail the spread of the COVID-19 disease.

JPMorgan Chase & Co (JPM.N) said on Saturday it expected real U.S. gross domestic product (GDP) to fall 10% in the first quarter and plunge 25% in the second quarter.

The CBOE volatility index fell 3 points on Monday, but was still near levels far above those in 2018 and 2019.

“Until we’ve got some evidence that can help deal with the virus, it’s probably more choppy markets ahead,” said Noah Hamman, chief executive office of AdvisorShares in Bethesda, Maryland.

At 9:52 a.m. ET the Dow Jones Industrial Average .DJI was up 83.28 points, or 0.38%, at 21,720.06, the S&P 500 .SPX was up 25.18 points, or 0.99%, at 2,566.65 and the Nasdaq Composite .IXIC was up 93.46 points, or 1.25%, at 7,595.84.

Of the 11 major S&P 500 sectors, only the energy index was in the red as U.S. crude oil prices fell below $20 for the first time in 18 years

The healthcare sector was the second-biggest boost to the benchmark index as progress on coronavirus vaccines and tests being developed by Johnson & Johnson (JNJ.N) and Abbott Laboratories (ABT.N) lifted their shares by about 4% and 10%, respectively.

Norwegian Cruise Line Holdings Ltd (NCLH.N), Royal Caribbean Cruises Ltd (RCL.N) and Carnival Corp (CCL.N) were again the top decliners after Berenberg slashed its price targets on cruise operators by about a third.

Declining issues almost matched advancers on both the NYSE and the Nasdaq.

The S&P index recorded one new 52-week high and no new low, while the Nasdaq recorded four new highs and eight new lows.

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White House Airlifts Medical Supplies From China in Coronavirus Fight

Officials have teamed up with medical supply companies to speed the arrival of masks, gloves, gowns and other goods.


By Ana Swanson

WASHINGTON — A commercial aircraft carrying 80 tons of gloves, masks, gowns and other medical supplies from Shanghai touched down in New York on Sunday, the first of 22 scheduled flights that White House officials say will funnel much-needed goods to the United States by early April as it battles the world’s largest coronavirus outbreak.

The plane delivered 130,000 N95 masks, 1.8 million face masks and gowns, 10 million gloves and thousands of thermometers for distribution to New York, New Jersey and Connecticut, said Lizzie Litzow, a spokeswoman for the Federal Emergency Management Agency. Ms. Litzow said that flights would be arriving in Chicago on Monday and in Ohio on Tuesday, and that supplies would be sent from there to other states using private-sector distribution networks.

While the goods that arrived in New York on Sunday will be welcomed by hospitals and health care workers — some of whom have resorted to rationing protective gear or using homemade supplies — they represent just a tiny portion of what American hospitals need. The Department of Health and Human Services has estimated that the United States will require 3.5 billion masks if the pandemic lasts a year.

That overwhelming demand has set off a race among foreign countries, American officials at all levels of government and private individuals to acquire protective gear, ventilators and other much-needed goods from China, where newly built factories are churning out supplies even as China’s own epidemic wanes.

“China has abundant protective equipment now, and the rest of the world has a huge shortage,” said James McGregor, the chairman of greater China for APCO Worldwide.

The Trump administration has been seeking to ramp up production of respirators, ventilators and other medical supplies in the United States, but factories are already running at full capacity. Companies like General Motors, Ford and others have stepped forward to try making these products for the first time, but they may need weeks or months before newly built facilities can ramp up their production.

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Exclusive: Qatar Airways says it will need state support as cash runs out

DUBAI (Reuters) – Qatar Airways will have to seek government support eventually, Chief Executive Akbar al-Baker told Reuters on Sunday, warning that the Middle East carrier could soon run out of the cash needed to continue flying.

Several states have stepped in to help airlines hammered by the coronavirus pandemic that has virtually halted international travel, with the United States offering $58 billion in aid.

Qatar Airways is one of few airlines continuing to maintain scheduled commercial passenger services and over the next two weeks expects to operate 1,800 flights.

“We have received many requests from governments all over the world, embassies in certain countries, requesting Qatar Airways not to stop flying,” Baker said by phone from Doha.

The state-owned carrier is operating flights to Europe, Asia and Australia, repatriating people who have been left stranded after many countries shut their borders.

“We will fly as long as it is necessary and we have requests to get stranded people to their homes, provided the airspace is open and the airports are open,” Baker said.

However, he warned that the airline was burning through cash and only had enough to sustain operations for a “very short period”.

“We will surely go to our government eventually,” Baker added.

He declined to say when the airline would need state aid, which could come in the form of loans or equity, but said it was taking measures to conserve cash.

Employees have taken paid and unpaid leave voluntarily and Baker said he had forfeited his salary until the airline returns to full operations. Staff would not be forced to take pay cuts, though Baker said some had offered to do so.

The airline had said before the pandemic it would report a loss this financial year because of a regional political dispute that forces it to fly longer, more expensive routes to avoid airspace that it had been banned from using by some of neighboring countries.

Rivals Emirates and Etihad Airways, of the United Arab Emirates, have grounded passenger operations, which Baker said had not benefited his airline.

Qatar Airways has been operating some flights at 50% occupancy or less and if it fills 45% of seats on flights over the next two weeks it will carry about 250,000 passengers.

“We are not taking advantage … this is a time to serve people who want to be with their loved ones in a very trying time,” Baker said.

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Wall Street tumbles after stellar rally as virus fears grow

(Reuters) – U.S. stock indexes fell sharply at the open on Friday, following the S&P 500 and the Dow’s best three-day run in nearly a century, as fears about the economic damage from the rapidly spreading coronavirus returned to the forefront.

The Dow Jones Industrial Average .DJI fell 653.70 points, or 2.90%, at the open to 21,898.47. The S&P 500 .SPX opened lower by 74.20 points, or 2.82%, at 2,555.87. The Nasdaq Composite .IXIC dropped 243.29 points, or 3.12%, to 7,554.25 at the opening bell.

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Treasury: U.S. will be 'compensated' for assistance to airlines

WASHINGTON (Reuters) – U.S. Treasury Secretary Steve Mnuchin said on Friday that taxpayers will “compensated” for providing up to $25 billion in direct grants to the airline industry.

“I’ve been very clear this is not an airline bailout,” Mnuchin told Fox Business Network Friday. “It is support to the airlines for national security reasons that the taxpayers are going to be compensated for.”

U.S. airlines are preparing to tap the government to cover payroll in a sharp travel downturn triggered by the coronavirus, even after the government warned it may take stakes in exchange for bailout funds or other financial instruments, people familiar with the matter said.

Under the bill approved Friday by the U.S. House of Representatives, Mnuchin can demand equity, warrants or other financial instruments to “provide appropriate compensation to the federal government.” Mnuchin did not directly answer whether he will seek warrants or equity.

The Treasury has an internal working group already discussing how to proceed, people briefed on the matter said. A person briefed on the matter said Mnuchin is expected to take a hard line with the airlines who had threatened to furlough tens of thousands of workers without immediate cash.

Airline stocks fell Friday on Mnuchin’s comments.

American Airlines Inc (AAL.O) fell 6%, while Southwest Airlines Co (LUV.N) fell 9% and JetBlue Airways (JBLU.O) fell 7%.

“We have people coming from other agencies in the government to come and help us out,” Mnuchin said, saying officials are working at “lighting speed.”

American Airlines chief executive Doug Parker said Thursday the largest U.S. airline is eligible for $12 billion of the $50 billion in U.S. government loans and grants. Parker said the conditions for the grants are “not currently well-defined.” But he added “I expect their terms will not be onerous.”

Delta Air Lines (DAL.N) said Friday the “payroll assistance funds ensure there will be no involuntary furloughs or reductions in pay rates through Sept. 30.”

Airlines are supposed to receive payments within 10 days of the law’s signing.

Boeing Co (BA.N) has sought at least $60 billion in government loans or loan guarantees aerospace industry. Earlier this week, Boeing chief executive Dave Calhoun said the company was not interested in giving the government equity in exchange for loans.

“Boeing has said they have no intention of using the program – that may change in the future,” Mnuchin said.

Boeing did not immediately comment Friday. “The taxpayers will be fully compensated,” Mnuchin said. “No bailout for Boeing or anyone else.”

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U.S. airlines cheer government relief but warn it is no 'cure' for deep industry crisis

CHICAGO (Reuters) – United Airlines Holdings Inc and Delta Air Lines welcomed on Friday a $50 billion relief package they said would protect jobs through September but warned that the continued challenges facing the industry will require more action.

Airlines are weathering their largest ever downturn as the coronavirus has ground global travel to a halt. A massive government stimulus package passed on Friday gives airlines some breathing room in terms of managing costs, but they still face tough decisions in the months ahead.

“If the recovery is as slow as we fear, it means our airline and our workforce will have to be smaller than it is today,” United said in a memo to employees.

Based on projections for the spread of the coronavirus and the global economy’s reaction, Chief Executive Oscar Munoz and President Scott Kirby said they expect “demand to remain suppressed for months after that, possibly into next year.”

Delta CEO Ed Bastian told employees that the relief package was not “a cure” and urged workers to continue signing up for voluntary unpaid leaves of absence.

U.S. airlines are set to receive $25 billion in grants to cover payrolls over the next six months, but are still encouraging workweek reductions, unpaid leaves and early retirements to further cut costs as they face more cancellations than bookings.

Before the global crisis, U.S. airlines were transporting a record 2.5 million passengers a day. Now planes are only 10% to 20% full and new bookings are showing 80% to 90% declines in traffic even after dramatic cuts in capacity, industry lobby Airlines for America said.

Airlines say the situation is dramatically different from just four weeks ago and getting worse each day with no end in sight. All are planning continued capacity reductions into the summer.

Unions representing pilots and flight attendants also welcomed the bill but said challenges remain in implementing it.

EQUITY STAKES

In exchange for the $25 billion in direct grants, U.S. Treasury Secretary Steve Mnuchin can demand equity, warrants or other financial instruments, a prospect that caused some frustration for airlines as the deal was reaching the finish line this week, people familiar with the matter said.

Airlines expect to learn the terms of the aid in the next five to 10 days, senior United executives said, and trust they will not be so onerous that airlines would not apply.

Related Coverage

  • U.S. airlines expect clarity on terms of payroll grants in 5-10 days: UAL senior executives

The industry directly supports 750,000 jobs and has argued that it must have the financial ability to jump-start operations once demand starts to return.

The leaders of American Airlines Group Inc, which has the largest workforce of any U.S. carrier, said late Thursday that they had not decided to apply for federal funds, noting that the terms were still unclear.

Still, Mnuchin insisted on Friday that taxpayers would be compensated. “I’ve been very clear this is not an airline bailout,” he told Fox Business Network.

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