Governments offer airlines aid as coronavirus drives deeper flight cuts

Europe’s Airbus signaled some government support may be needed if the coronavirus crisis lasts for several months, three people familiar with the matter told Reuters. The outbreak of the flu-like virus has wiped 41%, or $157bn, off the share value of the world’s 116 listed airlines, with many using up their cash so fast they can now cover less than two months of expenses, a Reuters analysis showed.

The airline industry’s main global body, the International Air Transport Association (IATA), said the total government support needed worldwide could reach $200bn. S&P Global Ratings said global passenger numbers were expected to decline by up to 30% this year and a full recovery was not likely until 2022 or 2023.

Sweden and Denmark on Tuesday announced $300m in loan guarantees for Scandinavian carrier SAS on Tuesday, becoming early movers in an expected rush of pledges to the sector.

US carriers have already asked Washington for $50bn in grants and loans, plus tens of billions in tax relief. Airline executives are due to speak with US President Donald Trump by phone on Wednesday morning.

With airlines halting plane deliveries and new orders to conserve cash, Boeing Co called on the US government to provide at least $60bn in access to liquidity, including loan guarantees, for the aerospace manufacturing industry.

The Australian government said it would refund and waive charges to airlines such as domestic air traffic control fees worth A$715m ($430m), including A$159m upfront, as it advised citizens against all travel outside the country.

Taiwan’s civil aviation regulator said late on Tuesday that its airlines could apply for subsidies and loans to help mitigate the cost of virus prevention measures, backdated to 15 January. The carriers can also apply for loans to help with normal operations, the regulator added, without specifying how much money was available.

US President Trump said on Tuesday that travel restrictions within the United States are being considered, which would be a further blow to its domestic carriers.

“You can do a national lockdown. Hopefully, we’re not going to need that,” Trump said. “It’s a very big step.”

US airlines are seeking to quickly reduce their workforces through early retirement packages or unpaid leave of up to 12 months with medical benefits in a further sign that airlines do not expect a quick rebound and must cut costs.

The situation has worsened for airlines this week as governments have tightened travel restrictions.

United Airlines Holdings Inc said it would cut 60% of its capacity in April, including 85% of its international flights.

Air New Zealand Ltd on Wednesday suspended trading for another two days to further assess the financial implications of drastic capacity cuts announced on Monday.

Auckland International Airport Ltd (AIA.NZ) said international passenger volumes on Monday were 44% lower than a year ago.

Australia’s No. 2 carrier, Virgin Australia Holdings Ltd said it would suspend all international flying from March 30 to 14 June and cut its domestic capacity in half, in a move that could lead to job losses.

Rival Qantas Airways Ltd on Tuesday announced plans to cut 90% of international capacity and its Singapore-based low-cost airline Jetstar Asia said it would stop flying altogether for three weeks from 23 March to 15 April.

Singapore Airlines Ltd (SIAL.SI) plans to halve its capacity through the end of April, with further cuts possible as it braces for a “prolonged” period of difficulty.

More on this subject: Coronavirus

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