The rescue of air transport, one of the sectors most affected by the COVID-19 crisis, begins to reach the airlines in the form of millionaire state aid like the one that Air France will receive for 7,000 million euros and that has just obtained the approval of Europe.
Air transport is a strategically important sector in the European Union (EU), representing 3.3% of employment and 4.1% of European Gross Domestic Product (GDP), and forecasts for 2020 point to a 55% drop in company revenues compared to the previous year, as a result of travel restrictions decreed by governments around the world.
In fact, companies that have already presented their first quarter results as Lufthansa records an operating loss before extraordinary of 336 million euros, while IAG, made up of British Airways, Iberia, Vueling and Aer Lingus, which will do so this Thursday, has already announced that, in its case, the loss will be 535 million euros.
Thus, after admitting that airlines will need financial “reinforcement” and “treasury aid” going forward, the Spanish Minister of Transport, Mobility and Urban Agenda, José Luis Ábalos, said on Monday that this is a problem throughout Europe and that all governments are working in this direction.
In addition to the measures that have already been implemented in Spain to support airlines, through the lines of the Official Credit Institute (ICO) and syndicated financing instruments with the public institute itself, “it is possible” that they need reinforcement of those same lines in the short term, he added in a press conference in Moncloa.
Iberia and Vueling have recently signed two syndicated financing contracts with the ICO for an amount that between the two amounts to 1,010 million euros (for a maximum of 750 million euros and 260 million, respectively).
The German State is also willing to allocate aid of 10,000 million euros to Lufthansa, of which approximately half would be by way of participation in the company or with dividend guarantees of 9%. The rest will be divided between aid from a credit fund guaranteed by the federal government.
Irish Ryanair, which could cut up to 3,000 jobs for pilots and cabin staff over the next two years due to the fall in demand caused by the pandemic, has criticized state aid received by former national flag companies to stay afloat during this crisis, forcing it to compete on unequal conditions.
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