In today’s news roundup, IATA calls for $200bn support to prop up the airline industry in the wake of the coronavirus pandemic as a study reveals most airlines are now just two months away from bankruptcy. UK government support is welcomed by ADS and Boeing calls for a US government bail out.
IATA calls for $200bn in government support for airlines
The International Air Transport Association (IATA) has said that airlines will need up to $200 billion in government support to help them survive the coronavirus crisis.
IATA chief economist Brian Pearce said many airlines were running out of cash, with 75 per cent not having enough to cover more than three months of unavoidable fixed costs.
The call comes after aviation market analyst CAPA warned that most of the world’s airlines face bankruptcy within two months. Most airlines have announced capacity reductions of 70 to 90 per cent for the coming months.
IATA head Alexandre de Juniac said that the industry “could not have foreseen the developments of the last days with massive restrictions on travel being put in place,” and said there was “no clear understanding how long they will remain in effect.”
He called for several “extraordinary measures” to be taken to support the industry. He welcomed the waiver on 80-20 use-it-or-lose-it slot rules, but expressed concern that this had only been granted until June.
De Juniac also asked governments to suspend EU 261 which requires airlines to pay between €250 and €600 to all passengers whose flights are delayed by three hours or more, or cancelled.
He said: “Cancelling flights is the reality of today, often times because of government restrictions. We continue to ask governments to understand that this is totally beyond the control of the airlines.”
Support needed to avoid “industry calamity”
De Juniac urged governments to avoid an “industry calamity” and enable airlines to provide crucial connectivity after the crisis in three ways: through direct financial support; government loans or loan guarantees as commercial banks may be reluctant to extend credit to airlines in the present situation and throuh tax relief through rebates or suspensions on all employer imposed payroll taxes paid to date, deferral or reduction in income taxes to date in 2020 and/or an extension of payment terms for the rest of 2020, along with a temporary waiver of ticket taxes and other Government-imposed levies.
“The world will get through this crisis,” said De Juniac, “And when it does, it will need a functioning air transport sector. Without financial relief that is not guaranteed.”
“In normal times, airlines transport about 35 per cent of global trade. And every job in air transport supports another 24 in the travel and tourism value chain – nearly 70 million jobs. Prioritising air transport – helping airlines financially survive through these dark times – will position the world for the eventual recovery.”
UK chancellor to discuss support package for airlines
UK chancellor Rishi Sunak is discussing a specific package to help airlines and airports as part of a £330bn bailout unveiled last night to keep businesses alive during the coronavirus epidemic.
Aviation bodies have urged ministers to release details of the support available and to implement it without delay. The chancellor will discuss the aviation support package with transport secretary Grant Shapps.
ADS Chief Executive Paul Everitt said: “The measures announced by the Chancellor today will provide welcome reassurance and support for companies across our industries and the wider economy.”
“Government assistance in addressing problems from temporary disruption to orders, supply chains or access to finance will help businesses to manage the economic challenges and minimise any long-term impact. We will make sure the Government is fully and quickly informed of issues raised in our sectors in the coming weeks and months, and will work closely with them to help develop and deliver the support required.”
Biggest crisis in sector’s history
The move has also been welcomed by Virgin Atlantic said the sector had been impacted by “the biggest crisis in its history.” EasyJet chief executive Johan Lundgren said without government action there would be “a real risk to the industry.”
The US government has also unveiled a $1tn aid package which also includes a bailout for airlines and hotels.
President Trump said the US would be “powerfully supporting” the Airline industry after its lobby group sought $58 billion in coronavirus support.
Trade group Airlines for America (A4A) which represents larger US carriers, is seeking $50 billion in loans, grants and tax breaks for commercial airlines, plus another $8 billion in support for the air cargo industry.
A statement for the group read: “US carriers are in need of immediate assistance as the current economic environment is simply not sustainable. This is compounded by the fact that the crisis does not appear to have an end in sight.”
Boeing calls for $60bn in aid for sector
Boeing has called for $60 billion in aid to support, saying that the figure represented the “minimum” needed to support its 17,000 suppliers and protect 2.5 million jobs following a near-shutdown of the industry to curb the global coronavirus pandemic.
Ryanair cuts schedules by more than 80 per cent
Ryanair is to cut its flight schedules by more than 80 per cent from Thursday until March 24. After that period the airline expects to ground all but “a very small number of flights” to maintain essential connectivity between the the UK and Ireland.
Logainair cuts more than half its flights
Loganair has imposed an emergency timetable, cutting more than half its flights. The reductions for April and May follow a dramatic drop in demand due to restrictions.
Staff have been asked to consider a series of measures aimed at protecting employment levels including reducing working hours by 20 per cent, accepting a 20 per cent reduction in salary as a result or taking a period of unpaid leave.
A quarter of Loganair’s fleet of 40 aircraft will be put into temporary storage as a result of the reductions.
Air Malta grounds flights
Air Malta has grounded its flights after Maltese health authorities banned all commercial travel to the island nation.