JetBlue CEO Robin Hayes said Wednesday that the U.S. airline industry needs additional government aid, warning it may face “a day of reckoning” as the coronavirus pandemic continues to ravage travel demand.
“As we get to the end of the first CARES Act period, through to September, we’re still going to be at a fraction of our normal levels. And so airlines are going to have to reset,” Hayes said in a “Squawk on the Street” interview.
“It has the potential to cause a significant amount of job losses in the industry and an extension of the CARES Act for the industry would prevent that,” he said.
Hayes’ comments Wednesday come days after a majority of lawmakers in the House of Representatives signaled their support for a six-month extension of federal aid to the airline industry. Negotiations are continuing on Capitol Hill over the shape and size of the next coronavirus relief package.
Congress appropriated about $32 billion in federal payroll aid for the U.S. airline industry as part of the $2.2 trillion CARES Act passed in March. As a condition of the assistance, airlines were prohibited from laying off or reducing the pay rates of employees through the end of September.
But airlines have continued to face financial pressure as the persistence of the country’s Covid-19 outbreak hampers travel demand — although it has rebounded from April lows, when sometimes fewer than 100,000 people per day were going through TSA security checkpoints.
An average of about 662,500 people have gone through airport security in the past seven days, according to a CNBC analysis of TSA data. Over a comparable span a year ago, nearly 2.6 million people on average went through security, per CNBC’s analysis.
“We are seeing in the U.S. volumes at 25 to 30% of what we would expect,” Hayes said.
Shares of JetBlue were down more than 3% on Wednesday. The New York City-based airline reported on Tuesday that its second-quarter revenue fell 90% compared with the year-ago period as a result of the pandemic.
Hayes said he believes the industry will be able to recover because people want to travel. There is just uncertainty about when that day will be, he said.
“We all agree that we’ll see a recovery at some point. I think people instinctively want to travel. There’s a lot of pent-up demand for travel, lots of friends and families they put off seeing,” he said. “The question is how do we bridge to that point.”
“Depending on a vaccine and the success and distribution of a vaccine, somewhere in the second half of next year I’m hopeful that this worm turns,” Calhoun said on “Squawk on the Street.”