Tuesday's Market Minute: Airlines Spiral During Outbreak

Yesterday, President Trump said that coronavirus could cause a U.S. recession, and that the outbreak could still be around even through August. What does this mean for airline companies? The U.S., Europe, and other countries are beginning travel bans for a month or more, and consumer demand plummeted even before those were announced. United Airlines Holdings UAL sees March revenue down over $1.5B year-over-year, and other international airlines like Delta Air Lines, Inc. DAL and American Airlines Group Inc AAL are also feeling pain—and all this is coming on the heels of the extended Boeing 737 Max grounding that affected flight availability and revenue before this.

Airlines are already looking for up to $50B in government aid, and this begs the question: are airlines too big to fail? Will any of them go bankrupt and close, or will they bounce back because the U.S. needs them, and be willing to bail them out? President Trump said yesterday that the U.S. would "powerfully" support the airlines, but the questions traders should ask are, when will that aid come, and where the bottom might be.

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