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White House Mulls Coronavirus Relief for Airlines, Cruise Industry

By Rich Smith - Mar 6, 2020 at 3:15PM

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No firm plans have been announced.

Airline stocks including Delta (DAL 3.43%), American (AAL 5.16%), and United Airlines (UAL 5.08%) turned sharply higher in Friday afternoon trading. The reason:

The Trump Administration may "consider deferring taxes for the cruise, travel and airline industries to stem the economic fallout of the coronavirus," according to a report from The Washington Post.  

3-D rendering of scary looking viruses on a red background

Image source: Getty Images.

As the paper explains, "the travel and tourism industries are facing their worst crisis since the 2001 terrorist attacks." Airlines alone are thought to have lost as much as $113 billion in sales from flight cancellations and reservations not made, and Administration officials are weighing how to respond to the crisis.

One possibility: deferring taxes on profits for travel industry companies.

White House economic advisor Larry Kudlow has confirmed that the Administration is considering "timely and targeted" measures to safeguard "some of the sectors might need some temporary assistance," while not confirming that tax deferrals per se will be the specific method of choice. He also made a point of reassuring investors that the coronavirus is largely "contained" in the U.S. and said the Administration doesn't want "to act prematurely," dismissing the need for a large economic stimulus package to right the economy. 

Contradicting the optimism of airline investors, this afternoon, shares of Royal Caribbean Cruises (RCL 4.79%) and Carnival Corporation (CCL 5.75%) are each down over 2%.

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Stocks Mentioned

Delta Air Lines, Inc. Stock Quote
Delta Air Lines, Inc.
DAL
$42.23 (3.43%) $1.40
United Airlines Holdings, Inc. Stock Quote
United Airlines Holdings, Inc.
UAL
$48.41 (5.08%) $2.34
American Airlines Group Inc. Stock Quote
American Airlines Group Inc.
AAL
$18.13 (5.16%) $0.89
Carnival Corporation Stock Quote
Carnival Corporation
CCL
$13.97 (5.75%) $0.76
Royal Caribbean Cruises Ltd. Stock Quote
Royal Caribbean Cruises Ltd.
RCL
$58.19 (4.79%) $2.66

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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