The big US aviation industry players applaud the tax reform
The United States tax reform was given the final approval and is expected to be signed in the upcoming days. “The biggest rewrite of the US tax code in a generation” has received mixed reactions but is met with enthusiasm by the biggest players in the US aviation industry.
The tax reform was expected to receive support from aviation industry even before it was passed, as it not only lowers corporate tax rate from 35% to 21%, but also allows significant cash tax reduction option for airlines, as they will be able to deduct aircraft purchase costs immediately from taxable income.
These reasons were mentioned by the execs of major United States airlines Southwest and Delta. They have separately expressed the support for the reform earlier in December 2017, expecting significant reductions both on its tax payments and savings on income statement because of it.
The new tax law "takes us to a position where we can think about growing faster, and of modernizing our fleet faster," said Gary Kelly, Southwest CEO at a Wings Club luncheon in New York City, as quoted by Travel Market Report.
Now, after the US Congress approved the reform, Airlines for America (A4A), the industry trade organization, issued official statement thanking House and Senate leaders for the changes that will “spur a new era of job growth and economic development”.
“These historic reforms to our nation’s tax code come as welcome news to the industry, the 700,000 workers we employ and the communities we serve,” said Nicholas E. Calio, A4A President and CEO. “We thank House and Senate leaders for their diligence in working to empower American businesses and U.S. airlines stand ready to continue leading the way toward a new era of job growth and economic development.”
The trade organization also explained that airlines will benefit from corporate rate reduction and depreciation provisions foreseen in the reform as they “generally pay taxes at the highest corporate rate and are capital intensive businesses which invest heavily in their employees, planes and equipment”. Together, the tax changes will help to “to continue and accelerate the significant investments already underway throughout the industry”, according to A4A.
Boeing has also expressed content with the reform by calling it a “critical driver of business, economic growth and innovation”. The company said it is “still studying all of the provisions of the new legislation” in an official statement on December 20, 2017, but it has “immediate commitments for an additional $300 million in investments […] as a result of the new tax law”. These investments include:
$100 million for funds used to support the employee gift-match programs and charities in education, in communities, and for veterans and military personnel;
$100 million for training, education, and other workforce development;
$100 million for "workplace of the future" facilities and infrastructure enhancements for Boeing employees.
"On behalf of all of our stakeholders, we applaud and thank Congress and the administration for their leadership in seizing this opportunity to unleash economic energy in the United States," said Dennis Muilenburg, the Chairman, President and Chief Executive Officer at Boeing. "It's the single-most important thing we can do to drive innovation, support quality jobs and accelerate capital investment in our country."
"For Boeing, the reforms enable us to better compete on the world stage and give us a stronger foundation for the investment in innovation, facilities, and skills that will support our long-term growth," added Muilenburg.
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