The airline industry has dreaded this day…
The time has come – and the outcome was not what we had hoped for.
Out of all the industries impacted by the pandemic, Airlines have been one of the hardest hit. And now, the time has run out for the 32,000 employees at American and United.
American Airlines CEO Doug Parker announced late Wednesday that the airline has no choice but “to cut 19,000 jobs after attempts to get more federal money failed.” United Airlines CEO Scott Kirby followed suit, announcing the decision to cut 13,000 jobs, which he explained was “a very sad day for all of us here at United.”
And this wasn’t a surprising decision seeing that the pandemic has caused air traffic to plunge, devastating the industry. For instance, American Airlines lost a whopping $5 billion in the first half of the year. And they’re not alone; United lost $3.3 billion. Truth be told, every company in the industry lost money – and looking at projections, 2021 isn’t going to be much better.
Where’s the money?
Many had hopes that these massive layoffs could be avoided, looking to Congress for relief. And we saw signs from Congress and Treasury Secretary Steven Mnuchin that a deal would be reached – giving the industry a lifeline. That said, lifeline would have come in the form of a multi-trillion-dollar stimulus package – delivering $25 billion to help airlines.
But it’s the same story we’ve heard for a while – the government needs more to reach an agreement. Now, with that said, both airlines said they could bring back the employees, reversing the decision if an agreement was reached. But in reality, there’s always a chance that this said package will ever come to fruition.
Here’s what that means for you…
How can I get some?
Now, the way this works that lawmakers agreed to give $25 billion in direct grants earlier this year as long as they had no involuntary job cuts – but that only lasted until the end of September. With October rolling through, and no new aid insight, the companies aren’t left with many other options.
But here’s the thing you probably wouldn’t expect, when it comes to companies laying off employees, we actually see their stock move higher due to cost savings that entails. For instance, we saw Disney move up after their recent announcement to let go of 28,000 park workers. But that doesn’t mean I’m chasing any airline at the moment. No way. Instead, I’m going to play a different travel piece of the sector, one I think will rally once the vaccine is established – and that is the cruise line world.
Now, my favorite name for cruise lines is Carnival Corporation & Plc (CCL). And I think setting yourself up with a long-term play that will allow the rally to happen post-vaccine will set you up for unbelievable profits.
In the spotlight: Slow but steady, right?
It might be a slow process trend, but America’s job recovery continues. Jobs reports rolled in on Thursday, and 837,000 Americans filed for first-time unemployment benefits last week. This number came in slightly lower than the prior week.
Claims under the Pandemic Unemployment Assistance, a program that Congress created to help workers who wouldn’t typically be eligible for benefits, such as the self-employed, came in at 650,120. Adding these together, there were 1.4 million total first-time claims for benefits last week, which comes out to be basically the same as last week.
Continued claims, which is the number of workers who have filed for benefits for at least two consecutive weeks, stood at 11.8 million. This slow recovery tells me one thing – that the economic recovery isn’t as strong as we might hope – and we could see it running out of steam sometime soon.
1,768% Revenue Surge Projected by This Time Next Year
A revolutionary new technology is sweeping across America. It’s already showing up in gas stations, restaurants, and grocery stores – but that’s just the tip of the iceberg. Right now, only a fraction of a projected 885 million of this company’s self-powered computers are in Americans’ hands, but that won’t be for long. Full deployment is expected by the end of the year, so there are three months before this company could surge. Click here to check it out.