Government prepares bailout to save aviation firms hit by virus crisis
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.
EasyJet said its focus is on ‘measures to help with short-term liquidity and protect jobs’.