The stock market suffered significant losses on Friday, as coronavirus concerns continued to hurt investor confidence. The Dow Jones Industrial Average (^DJI 0.49%) didn't quite give back all of its gains from Thursday, but market participants seemed reluctant to show much optimism heading into the weekend. Losses for the Dow, S&P 500 (^GSPC 1.12%), and Nasdaq Composite (^IXIC 1.68%) were between 1% and 2%.

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Data source: Yahoo! Finance.

The coronavirus pandemic has hit the entire global economy hard, but few industries have taken it on the chin harder than airlines. Lawmakers made federal aid available through the stimulus bill, and American Airlines Group (AAL 2.44%) and Southwest Airlines (LUV 1.93%) officially stated earlier that they'll file applications for grants by the 5 p.m. EDT deadline today. Delta Air Lines (DAL 3.23%) and United Airlines Holdings (UAL 2.96%) are likely to follow suit. Yet even with that help, some airline stocks have continued to fall as the full ramifications of taking government help aren't entirely clear.

Losing altitude

American shares fell 7% Friday, slipping below the $10 mark as investors weighed the airline's latest moves. American is cutting its international flight schedule by 90% in April and May, with expectations that it will reduce peak summer capacity by 60%. Domestic flight schedules will take big hits, too, including 70% to 75% of flights in April and 80% in May. The moves follow extensions of stay-at-home orders throughout an increasing number of states.

Airplane on apron with American markings and logo.

Image source: American Airlines Group.

To help it keep workers on its payroll, American has filed for its share of $25 billion that the federal government set aside in the coronavirus stimulus bill. Hoping to get about $6 billion, American likely faces draconian moves with its workforce without the assistance.

Southwest also said earlier this week that it would file an application before the deadline to discuss federal assistance grants. The Texas-based carrier, whose shares dropped 3% Friday, is one of several airlines that have turned to transporting cargo in what would otherwise be empty flights.

The price airlines could pay

Yet it's clear from the tone of the airlines that they're less than excited about having to ask for help. As Southwest put it, it's filing an application "to discuss the specific details regarding possible grants that could boost liquidity and provide job security." That signals that whether it actually accepts the assistance could depend on the terms that the Treasury Department sets.

For its part, the Treasury hasn't yet clarified exactly what it'll be seeking from airlines. Yet some groups are nervous about the potential impacts of the government driving a hard bargain. Flight attendant union groups have argued that if the Treasury seeks to take equity stakes in airlines (either directly through preferred stock or indirectly via warrants), then airlines will refuse assistance. Instead, they'll just lay off flight attendants and other employees, which will effectively put the resulting unemployment insurance burden on the government anyway and increase the odds of a broader economic recession.

Until the Treasury shows its hand, investors won't know whether airlines are likely to come to a final agreement with the federal government for help. With billions of dollars at stake, that uncertainty is making airline shareholders more nervous than ever.