Airline shares get a boost from Donald Trump's tweets

Shares in major US airlines were poised for gains Wednesday after President Donald Trump tweeted his support for relief package for the struggling industry and prodded Congress to take action.

“The House & Senate should IMMEDIATELY Approve 25 Billion Dollars for Airline Payroll Support,” Trump tweeted late Tuesday night. “I will sign now!” That followed the president's tweets earlier Tuesday saying he told his representatives to end negotiations on a relief package until after the election next month. Airline stocks rose anywhere from one per cent to five per cent in morning trading Wednesday.

The airline industry has been one of the hardest-hit sectors of the economy since the virus pandemic took hold this spring, with the largest four US carriers losing more than $10 billion between them. Airlines began furloughing more than 32,000 employees on Thursday after a federal prohibition on job cuts expired. American and United said they could reverse the furloughs if Congress and the White House quickly agree to provide billions more in taxpayer help to the struggling industry.

The White House included $20 billion for airlines in a $1.6 trillion Covid-19 relief proposal, moving closer to House Democrats' $2.2 trillion plan. Trump's contradictory tweets Tuesday night further muddled the stalemate between the two parties with the election less than four weeks away.

Airlines and their unions have lobbied for money to keep workers on airline payrolls through March 2021. They received $25 billion, mostly in cash, to pay employees through September 30 in exchange for avoiding layoffs or furloughs.

Airlines have already shrunk by persuading tens of thousands of employees to volunteer for early retirement or buyouts. Even with those departures, the airlines still have more employees than they need because air travel is down nearly 70 per cent from a year ago as people shun the close confines of airplanes for fear of getting infected.

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In addition to the airline relief, Trump's tweet prodded lawmakers to come up with $135 billion for small businesses and said the bill could be paid for with “unused funds from the Cares Act.” He also urged Congress to send him a stand-alone bill that would pay for another round of $1,200 stimulus checks to individual Americans. Trump's tweets came just hours after the president, also via Twitter, all but squashed any possibility of a relief package before the November 3 election.

In the first series of tweets, Trump said: “I have instructed my representatives to stop negotiating until after the election when, immediately after I win, we will pass a major stimulus bill that focuses on hardworking Americans and small business.” Wall Street responded with a late sell-off Tuesday, with the Dow Jones Industrial Average falling almost 400 points.

Also read: US stocks gain on Donald Trump's comment on stimulus

Trump then reversed course later in the evening, offering some optimism that progress could be made on more financial help for Americans and US businesses. Without more stimulus, economists say growth likely will slow significantly in the final three months of the year.