No industry-wide bailout for UK airlines and airports

Airlines and airports in the UK have been told by the Chancellor to find other ways to survive the coronavirus crisis.

In a letter shared on social media yesterday, Rishi Sunak told UK airlines an industry-wide bailout would only be considered as a last resort.

Instead individual companies were told to explore the possibility of raising funds from other sources, including existing investors.

The Chancellor was responding to calls for an aid package for the industry on top of the measures already announced for UK businesses.

Last week he said he was discussing special measures with transport secretary Grant Shapps, leading to hopes of financial aid for the sector.

But in the letter yesterday, he said: "We would expect all companies to be pursuing all possible actions to preserve cash and maximise liquidity, including engaging with shareholders, lenders and the markets, and utilising all available assets and facilities."

Airlines were also told that taxpayer support would only be possible ‘if all commercial avenues have been fully explored, including raising further capital from existing investors’.

The letter came as airline body IATA thanked those governments that have already pledged support for the industry and urged others to follow suit ‘before more damage is done’.

"Airlines are fighting for survival in every corner of the world. Travel restrictions and evaporating demand mean that, aside from cargo, there is almost no passenger business. For airlines, it’s apocalypse now. And there is a small and shrinking window for governments to provide a lifeline of financial support to prevent a liquidity crisis from shuttering the industry," said Alexandre de Juniac, IATA director general and CEO.

According to IATA’s latest analysis, annual passenger revenues will fall by $252 billion if severe travel restrictions remain in place for three months.

The figure is well-over double IATA’s previous analysis of a $113 billion revenue hit that was made before sweeping travel restrictions.

"It did not seem possible, but in a matter of days, the crisis facing airlines worsened dramatically. We are 100% behind governments in supporting measures to slow the spread of COVID-19. But we need them to understand that without urgent relief, many airlines will not be around to lead the recovery stage," said Juniac.

"Failure to act now will make this crisis longer and more painful. Some governments are already responding to our urgent calls, but not enough to make up the $200 billion needed."

Karen Dee, chief executive of the Airport Operators Association, said the UK Government’s decision would leave airports struggling to provide critical services and will hamper the UK recovery.

"After having publicly announced a support package for airports and airlines, we’re surprised by where we find ourselves today. Our industry will now have to fight on its own to protect its workforce and its future," she said.

"With passenger numbers approaching close to zero, UK airports have seen a major drop in revenue. They are taking unprecedented steps to safeguard airport staff and operations through this crisis, which could include in some cases considering shutting down for a period of time. This could have major impacts for UK communities and businesses.

"While countries across Europe have recognised the vital role airports play and are stepping into the breach, the UK Government’s decision to take a case-by-case approach with dozens of UK airports is simply not feasible to provide the support necessary in the coming days.

"Not only does the decision leave airports struggling to provide critical services, it will hamper the UK recovery.

"We urge the Government to reconsider and at the very least provide a comprehensive package of support for airports and ground-based services, to ensure the UK’s critical aviation infrastructure is ready to take off once the COVID-19 pandemic recedes."

EasyJet said: "We are reviewing the letter from the Chancellor alongside the measures announced last week for businesses. Our immediate focus is on liquidity and protecting jobs and we are working with the Government to make best use of these measures."