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Governments offer financial bailouts to airlines, but it's no free lunch
来源： 编辑：编辑部 发布：2020/03/26 09:15:13
POLITICIANS in the United States and New Zealand have set out conditions for bailouts for airlines, in order for them to ride out the heavy economic blow dealt to their operations by the global coronavirus pandemic.
Conditions include provisions that loans may convert to government equity stakes, with Air New Zealand's bailout also dependent on suspending its dividend and paying interest rates of seven to nine per cent, while US airlines cannot increase executive pay or provide "golden parachutes" for two years, reported Reuters.
New Zealand has offered its national carrier a NZ$900 million (US$505.98 million) lifeline, which Finance Minister Grant Robertson said would help it survive after the government banned all non-resident arrivals to the country.
"That puts us in a very good position over the next several months," Air New Zealand chief executive Greg Foran told reporters of the loan, which it will not draw down immediately. "We would expect the airline industry will look different at the end of this. Not all airlines are going to survive."
Under the $58 billion US proposal for passenger and cargo carriers, the US Treasury Department could receive warrants, stock options, or stock as a condition of government assistance in order for the government to participate in gains and be compensated for risks.
"We are not bailing out the airlines or other industries - period," US Senate Appropriations Committee chairman Richard Shelby said in a statement. "Instead, we are allowing the Treasury Secretary to make or guarantee collateralised loans to industries whose operations the coronavirus outbreak has jeopardised."
The International Air Transport Association (IATA) has forecast the industry will need up to $200 billion of state support, piling pressure on governments facing demands from all quarters and a rapid worsening in public finances as economies slump.
"Money is very tight in most countries so governments need to step back and be hard-nosed about any form of rescue, which could come in various forms - cash, equity, loans, bonds etc. - but it all must come with strict conditions or strings, attached," Malaysia-based aviation consultancy Endau Analytics head Shukor Yusof said in an email.
Even with financial assistance, airlines around the world are placing thousands of workers on unpaid leave, deepening the shocks to local economies.
Air Canada has 5,100 excess cabin crew after cutting its flying schedule and plans to start notifying them they will be laid off at least temporarily, its flight attendants union said in a statement.
The airline said it had begun talks with unions about temporary lay-offs but did not have final numbers yet.
Cathay Pacific Airways said it would slash passenger capacity by 96 per cent, and possibly more in April and May, as new government curbs make travel more difficult.
Its low-cost carrier, HK Express, is suspending operations until April 30, bringing forwards plans to put employees on unpaid leave.
Some airlines are looking to place their staff with temporary employers. Air New Zealand may redeploy some workers to the government, possibly in health roles and contact tracing, New Zealand's finance minister told reporters.
Qantas Airways is talking to Australian retailer Woolworths Group Ltd about job opportunities as grocery sales surge, while 1,000 laid-off SAS airline workers in Sweden are being offered fast-track healthcare training to help fight the coronavirus.
The only bright spot for the industry is the cargo market given that the collapse in passenger flights has reduced the bellyhold capacity available to the air freight sector, prompting some carriers to fly planes empty of passengers and baggage but with cargo in their bellies.
American Airlines Group said it would use some of its grounded Boeing 777 passenger jets to fly cargo between the United States and Europe.
Conditions include provisions that loans may convert to government equity stakes, with Air New Zealand's bailout also dependent on suspending its dividend and paying interest rates of seven to nine per cent, while US airlines cannot increase executive pay or provide "golden parachutes" for two years, reported Reuters.
New Zealand has offered its national carrier a NZ$900 million (US$505.98 million) lifeline, which Finance Minister Grant Robertson said would help it survive after the government banned all non-resident arrivals to the country.
"That puts us in a very good position over the next several months," Air New Zealand chief executive Greg Foran told reporters of the loan, which it will not draw down immediately. "We would expect the airline industry will look different at the end of this. Not all airlines are going to survive."
Under the $58 billion US proposal for passenger and cargo carriers, the US Treasury Department could receive warrants, stock options, or stock as a condition of government assistance in order for the government to participate in gains and be compensated for risks.
"We are not bailing out the airlines or other industries - period," US Senate Appropriations Committee chairman Richard Shelby said in a statement. "Instead, we are allowing the Treasury Secretary to make or guarantee collateralised loans to industries whose operations the coronavirus outbreak has jeopardised."
The International Air Transport Association (IATA) has forecast the industry will need up to $200 billion of state support, piling pressure on governments facing demands from all quarters and a rapid worsening in public finances as economies slump.
"Money is very tight in most countries so governments need to step back and be hard-nosed about any form of rescue, which could come in various forms - cash, equity, loans, bonds etc. - but it all must come with strict conditions or strings, attached," Malaysia-based aviation consultancy Endau Analytics head Shukor Yusof said in an email.
Even with financial assistance, airlines around the world are placing thousands of workers on unpaid leave, deepening the shocks to local economies.
Air Canada has 5,100 excess cabin crew after cutting its flying schedule and plans to start notifying them they will be laid off at least temporarily, its flight attendants union said in a statement.
The airline said it had begun talks with unions about temporary lay-offs but did not have final numbers yet.
Cathay Pacific Airways said it would slash passenger capacity by 96 per cent, and possibly more in April and May, as new government curbs make travel more difficult.
Its low-cost carrier, HK Express, is suspending operations until April 30, bringing forwards plans to put employees on unpaid leave.
Some airlines are looking to place their staff with temporary employers. Air New Zealand may redeploy some workers to the government, possibly in health roles and contact tracing, New Zealand's finance minister told reporters.
Qantas Airways is talking to Australian retailer Woolworths Group Ltd about job opportunities as grocery sales surge, while 1,000 laid-off SAS airline workers in Sweden are being offered fast-track healthcare training to help fight the coronavirus.
The only bright spot for the industry is the cargo market given that the collapse in passenger flights has reduced the bellyhold capacity available to the air freight sector, prompting some carriers to fly planes empty of passengers and baggage but with cargo in their bellies.
American Airlines Group said it would use some of its grounded Boeing 777 passenger jets to fly cargo between the United States and Europe.