What happened

President Donald Trump on Tuesday afternoon said he has instructed White House negotiators to call off stimulus talks until after the Nov. 3 election. That sent airline stocks falling late in the trading session, with American Airlines Group (NASDAQ:AAL) leading the pack down with a 4.5% loss on the day.

So what

Airlines have been hit hard by the coronavirus pandemic, and have survived this long only because of a combination of government and private funding that has given them the liquidity they need to absorb losses. The $50 billion in government support provided as part of the CARES Act is now extinguished, and the companies and their unions have been lobbying for a new round of payroll support as part of a new stimulus bill.

An American Airlines airplane tail lit up at night.

Image source: American Airlines.

Lawmakers from both parties seem to be on board with helping the airlines, but the assistance was to come as part of a broader stimulus bill that has been discussed by White House, Senate, and House leadership. But Trump on Tuesday said he is calling off negotiations until after the election. 

Airlines are flying fewer than half the passengers who traveled just a year ago, and absent government assistance they need to dramatically bring down their headcounts in the weeks to come. American last week announced plans to furlough 19,000 employees, but said if the government acted those cuts could be avoided.

Unless Trump changes his mind or lawmakers decide to push assistance to airlines as a stand-alone bill, it appears American Airlines is about to get much smaller.

Now what

American shares were likely hit harder than shares of other airlines because the company, due to its debt load, is considered the most vulnerable among major airlines. But even without the assistance, the company should still have ample liquidity to ride out the crisis into early 2021, and is in no risk of a bankruptcy filing.

Still, the unwinding of the business happening today is going to take years to undo, and American due to its debt is going to be focused on repayments, and not expansion, even after a recovery is at hand. There isn't much reason to get excited about shares of American Airlines right now.