Australia and Taiwan to bail out airlines
Australia and Taiwan joined governments offering financial aid to airlines as the coronavirus pandemic and stricter travel controls forced carriers to deepen cuts to capacity and staffing.
US airlines have asked Washington for $50bn in grants and loans, as well as tens of billions in tax relief.
Aircraft maker Boeing has called on the US government to provide at least $60bn in access to liquidity, including loan guarantees, for the aerospace manufacturing industry as airlines halt deliveries and new orders to conserve cash.
Airbus had also signalled some government support might be needed if the coronavirus crisis lasts for several months, three people familiar with the matter said.
The Australian government said it would refund and waive charges to airlines such as domestic air traffic control fees to the value of A$715m, including A$159m upfront, as it advised citizens against all foreign travel.
Taiwan’s civil aviation regulator said late on Tuesday that its airlines could apply for subsidies and loans backdated to January 15. Sweden and Denmark announced on Tuesday $300m in loan guarantees for Scandinavian carrier SAS.
El Al Israel Airlines said on Wednesday it has sent 5,500 of its 6,000 workers on unpaid leave until May 31 after it slashed its flight schedule.
The outbreak of the flu-like virus has wiped 41%, or $157bn, off the share value of the world’s 116 listed airlines, with many using up their cash so fast they can now cover less than two months’ expenses, a Reuters analysis shows.
TRAVEL RESTRICTIONS
The International Air Transport Association (Iata) representing the sector said $200bn in government support could be needed worldwide.
Trump said on Tuesday that travel restrictions within the US were being considered, which would be a further blow to its domestic carriers.
“You can do a national lockdown. Hopefully, we’re not going to need that,” Trump said.
“It’s a very big step,” he said.
US airlines are seeking to quickly reduce their workforces through unpaid leave of up to 12 months with medical benefits or early retirement packages in a sign carriers do not expect a quick rebound.
Global passenger numbers were expected to fall by as much as 30% in 2020 with a full recovery not likely until 2022 or 2023, S&P Global Ratings said.
“At the risk of being alarmist, the airline industry is on the brink of collapse as governments are quarantining large portions of their populations and closing off borders,” Cowen analyst Helane Becker told clients.
CUTS GET DEEPER
The situation has worsened for airlines this week as governments have tightened travel restrictions. United Airlines said it would cut 60% of its capacity in April, including 85% of its international flights.
Air New Zealand on Wednesday suspended trading for another two days to assess the financial implications of deep capacity cuts announced on Monday.
“This is going to be tough as we forecast the volumes that we are looking at over the next few months,” CEO Greg Foran said.
Up to 30% of the airline’s 12,500 staff will not be required, he said, adding that the carrier would offer leave without pay and voluntary redundancies before moving to job cuts.
Qatar Airways had laid off about 200 employees, all Filipino nationals based in Qatar, Philippine labour secretary Silvestre Bello said.
Auckland International Airport said international passenger volumes on Monday were 44% lower than a year ago.
Australia’s Qantas Airways announced plans on Tuesday to cut 90% of international capacity and its Singapore-based lowcost airline Jetstar Asia said it would stop flying altogether for three weeks from March 23 to April 15.
Australia’s second-largest carrier, Virgin Australia, said it would suspend all international flying from March 30 to June 14 and cut its domestic capacity in half, in a move that could lead to job losses.
Singapore Airlines plans to halve its capacity through the end of April.