Government will only bail out airlines as a 'last resort', chancellor says

Published by Rhys Taylor-Brown on March 25th 2020, 8:08am

Chancellor Rishi Sunak had told airlines that the government will only issue a bailout as a "last resort", asking them instead to turn to shareholders for funds in the first instance.

Airlines have been urging the government to issue a rescue package to help steer the sector through the coronavirus pandemic, with one industry expert calling Sunak's decision a "surprise".

Swathes of border closures in countries across the world and governments issuing orders to remain at home has seen demand for flights drop sharply, meaning large amounts of aircraft are being grounded.

EasyJet, Ryanair and Virgin Atlantic are just three airlines to have grounded the majority of its flights. The IAG Group which owns British Airways has cut its capacity by 75 per cent.

Writing a letter to airline chiefs, Sunak informed them that the government will only discuss funding once they had "exhausted other options".

Alexandre de Juniac, head of the International Air Transport Association [IATA] industry body, believes the sector will face an "apocalypse" unless governments step in and help.

De Juniac said: "Travel restrictions and evaporating demand mean that, aside from cargo, there is almost no passenger business.

"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."

Should travel restrictions remain in place for three months, the IATA has projected annual worldwide revenue from flight ticket sales to fall by a huge $252 billion [£215 billion] compared to 2019, a 44 per cent decline.

The effect on airlines has had a knock-on effect on UK airports, who have jettisoned hundreds of jobs since the outbreak began.

Airport Operators Association [AOA] head, Karen Dee, said that Sunak's decision not to help the sector was a "surprise".

She said: "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 today leave airports struggling to provide critical services, it will hamper the UK recovery."

Dee added that the aviation industry will have no choice but to "fight on its own to protect its workforce and its future".

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Rhys Taylor-Brown
Junior Editor
March 25th 2020, 8:08am

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