The last few months have been extremely difficult for the airline industry with major players such as Delta Air Lines, Inc. (NYSE:DAL) grounding their flights due to the coronavirus. However, this week has kicked off quite nicely for the airline industry and it mostly has to do with a recent stimulus bill.
Investors have expressed optimism in airline stocks after Democrats introduced a bill that seeks to facilitate the provision of a coronavirus package worth $2.2 trillion. The bill will allow the airline industry to receive the stimulus package which will help airline companies to get their operations back on track. This is critical not only to investors and the airlines but also to the employees of the airline companies.
What will be the impact of the proposed bill on the airline industry?
A previous act called CARES Act relief funding was passed earlier this year. It was meant to provide funding for the airline industry and one of the critical aspects of this act was that it was structured with airline employees in mind. The act prevented airline companies from laying off their employees until October 1. This means hundreds of thousands of jobs if not millions would be at stake if the airlines were to fire their employees.
Loss of jobs is neither good for the airlines, nor the employees and certainly not the government as it reflects on the country’s economic status. It is thus important for the government to ensure that there is a favorable balance for all parties moving forward. The bill introduced by the democrats represents an important step in the right direction.
The reaction by investors indicates the level of uncertainty in the market about how the airline industries would get back on top. The nod by investors in the form of rallying airline stocks since they understand the connection between the stimulus package for the airline industry which is one of the most important industries. It highlights the government’s commitment to facilitating airline industry recovery and overall economic recovery.
