Gov­ern­ment pre­pares bailout to save avi­a­tion firms hit by virus cri­sis

The Guardian - - News | Coronaviru­s - Gwyn Topham Trans­port cor­re­spon­dent

Air­lines and air­ports have warned that time is run­ning out for the gov­ern­ment to en­act promised measures to help the avi­a­tion in­dus­try, with EasyJet and Ryanair set to stop fly­ing after to­day and less than 5% of nor­mal pas­sen­ger num­bers ex­pected at ma­jor air­ports.

Further talks are ex­pected be­tween min­is­ters and in­dus­try fig­ures to­day as the gov­ern­ment wres­tles with how to keep crit­i­cal in­fra­struc­ture func­tion­ing.

Al­though work is un­der­stood to have con­tin­ued over the week­end, there is frus­tra­tion in the in­dus­try at the time that has elapsed with­out any con­crete de­tail, even after the chan­cel­lor, Rishi Su­nak, made a sec­ond ma­jor in­ter­ven­tion in three days on Fri­day.

Karen Dee, chief ex­ec­u­tive of the Air­port Op­er­a­tors As­so­ci­a­tion, said measures to support em­ploy­ers were wel­come, but avi­a­tion had

‘Air­lines can’t sur­vive with no rev­enue com­ing in. State in­vest­ment is es­sen­tial be­fore it’s too late’

Brian Strut­ton Balpa gen­eral sec­re­tary

been hold­ing off tak­ing dras­tic steps pend­ing promised spe­cial state support. She said: “While gov­ern­ment has been re­cep­tive, it has not led to clear next steps and air­ports will now face mak­ing ex­tremely dif­fi­cult de­ci­sions.”

The process of lay­ing off hun­dreds of staff has now started at air­ports, in­clud­ing Ed­in­burgh. An in­dus­try source said that con­firmed as­sis­tance, such as de­fer­ral of some charges, were “peanuts rather than the big bazooka”.

The pilots union Balpa warned that more air­line staff would be made re­dun­dant be­fore spe­cial measures were im­ple­mented and ac­cused the gov­ern­ment of “sit­ting on its hands while air­lines are shut­ting down”. Balpa’s gen­eral sec­re­tary, Brian

Strut­ton, said: “Air­lines can’t sur­vive with no rev­enue com­ing in and are al­ready cut­ting wages and jobs. State in­vest­ment in UK air­lines, as other coun­tries are do­ing, is es­sen­tial as a mat­ter of ur­gency be­fore it’s too late.”

It is un­der­stood measures be­ing con­sid­ered by the Trea­sury in­clude the gov­ern­ment tak­ing a di­rect stake in car­ri­ers, but dis­cus­sions are not ex­pected to reach a con­clu­sion until at least the mid­dle of this week.

While air­ports have pre­sented a united front in calls for as­sis­tance, gov­ern­ment in­ter­ven­tion in air­lines is more com­pli­cated. Al­though Bri­tish Air­ways has warned its staff that its sur­vival is at risk, BA’s owner, IAG, has dis­tanced it­self from calls for state as­sis­tance led last week by Richard Bran­son’s Vir­gin At­lantic. IAG’s chief ex­ec­u­tive, Wil­lie Walsh, has long ar­gued that the Euro­pean in­dus­try needs to con­sol­i­date.

Po­ten­tial gov­ern­ment aid an­nounced in Jan­uary to help Flybe, be­fore the coron­avirus out­break pushed the air­line into bank­ruptcy, was chal­lenged by IAG and Ryanair.

EasyJet said: “We fully support and wel­come the gov­ern­ment’s com­mit­ment to support air­lines dur­ing th­ese un­prece­dented times. Our fo­cus is on measures to help with short-term liq­uid­ity and pro­tect jobs.” EasyJet is go­ing ahead with a div­i­dend pay­out that will hand around £60m to its largest share­holder, Ste­lios Haji-Ioan­nou, alone. The air­line said it was legally obliged to make the pay­out.

A De­part­ment for Trans­port spokesper­son said: “A num­ber of measures to support the avi­a­tion sec­tor have al­ready been an­nounced, in­clud­ing Time to Pay, fi­nan­cial support for em­ploy­ees and the Bank of Eng­land’s Covid cor­po­rate fi­nanc­ing fa­cil­ity . The gov­ern­ment is work­ing ur­gently to de­velop further measures.”

The Bri­tish Cham­bers of Com­merce said sole traders had felt lit­tle re­as­sur­ance from the measures that helped larger firms. The BCC di­rec­tor gen­eral Dr Adam Mar­shall said: “While we un­der­stand the com­plex­ity in­volved, there are five mil­lion self-em­ployed peo­ple who need help sim­i­lar in scale and scope to that put in place for larger firms in re­cent days.”

Unions also urged the gov­ern­ment to en­sure its wage support scheme did not omit around a mil­lion con­struc­tion work­ers con­sid­ered to be trapped in “bo­gus self-em­ploy­ment”. Unite said the work­ers are taxed at source and then claim ex­penses as self-em­ployed work­ers, un­der con­struc­tion in­dus­try pay­roll schemes that largely ben­e­fit the em­ploy­ers.

PHO­TO­GRAPH: FABRIZIO BEN­SCH/REUTERS

EasyJet said its fo­cus is on ‘measures to help with short-term liq­uid­ity and pro­tect jobs’.

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