March 4, 2020 / 7:08 PM / 5 months ago

UPDATE 2-No U.S. airline bailouts needed over coronavirus-hit demand, U.S. business group says

(Adds details on United Airlines' planned flight cuts)

By David Shepardson

WASHINGTON, March 4 (Reuters) - The head of the U.S. Chamber of Commerce said on Wednesday that the government will not need to bail out U.S. airlines in the wake of sagging travel demand due to concerns over the coronavirus.

"We don't need any bailouts here," U.S. Chamber Chief Executive Tom Donohue said at a news conference with travel leaders aimed at reassuring Americans to keep traveling. "Bottom line is we're going to run just like business as usual - with a little higher heartbeat and get it done."

Hours later United Airlines said it would slash 20% of international flights and 10% of U.S. flights in April as it launched a hiring freeze, voluntary unpaid leaves and delayed salary increases for executives. It plans similar flight cuts for May.

Company leaders warned employees the cuts may not be enough depending on future demand.

President Donald Trump said at a meeting with airline executives later on Wednesday that they had not sought any financial assistance. "We haven't discussed that," Trump said.

Roger Dow, who heads the U.S. Travel Association, said at the same event as Donohue that he considers a bailout unnecessary, but suggested the government could take steps to boost demand for travel.

Travel industry officials said the government could reinstate some tax incentives to encourage business travel and spend additional funds to promote U.S. travel destinations.

Analysts at Rabobank said in a research note on Wednesday that "financially, given the huge blow that airlines and other service-sector firms are likely to suffer, we are also certain to see state aid and/or bailouts to key firms, even if this is technically illegal in some countries currently. We might also face some temporary quasi-nationalizations once again, as during 2008-09."

Trump and Vice President Mike Pence met with the chief executives of American Airlines, United, Southwest Airlines Co and other major airlines to discuss the coronavirus outbreak and the business outlook for the industry.

U.S. airline stocks have fallen - some as much as 40% in recent weeks, though they recovered slightly on Wednesday.

Many businesses have restricted employee travel and numerous business meetings and conferences have been canceled in recent weeks.

Since the virus surfaced in China late last year, it has continued to spread in South Korea, Japan, Europe, Iran and the United States, and several countries recently reported their first confirmed cases, taking the total to some 80 nations hit with the flu-like illness that can lead to pneumonia.

Reporting by David Shepardson in Washington Editing by Matthew Lewis

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