“There are no words to describe the devastating impact of Covid-19 on the airline industry,” said Alexandre de Juniac, president of the International Air Transport Association (IATA), in a press release published this Tuesday, April 7. According to association estimates, airlines need state support of nearly $ 250 billion to avoid serial bankruptcies, with 75% of them having no more than three months of cash available to them.
A message received 5 out of 5 by governments. In the United States, where American companies were the first to call for help, the United States Treasury will release more than $ 50 billion in direct aid and secured loans. This is three times what the sector had perceived after the attacks of September 11, 2001!
Direct help and tax deferral
The four largest carriers, American, Delta, Southwest and United Airlines have applied for direct assistance of $ 30 billion put in place by the government on April 1 to pay wages and pensions. In addition, another 25 billion in guaranteed loans and tax deferrals by the end of 2021.
This aid is however subject to conditions: impossibility of dismissing employees by September 30 and maintenance of domestic lines for two years. American Airlines should be able to touch nearly 12 billion dollars and Delta, Air France-KLM's partner, 11 billion. “This will probably not be enough,” however warned Ed Bastian, the managing director of Delta. The latter anticipates a 90% drop in the company's revenues in the second quarter. A possible injection of cash by the federal government into the companies is also being discussed – limited to 2% of the capital – to help them get through the crisis.
Now everyone takes out their checkbook: in Asia, Singapore Airlines has obtained authorization from the Singaporean sovereign wealth fund Temasek, its main shareholder, to raise up to 9.6 billion euros in the form of new shares and bonds convertible. In the Middle East, the emir of Dubai has promised to support the largest Gulf company, Emirates, while Akbar Al Baker, the boss of Qatar Airways has said it will also request state aid.
In Europe, the European Commission is forced to drop ballast on aid. Brussels has thus accepted the postponement of taxes and fees (civil aviation, solidarity, air navigation) until December. But these measures will especially make sense when passenger traffic resumes.
Race against time
The French and Dutch governments could go further: they are studying the establishment of a credit guaranteed by the two states in the amount of 6 billion euros, including four billion for France. Direct intervention in the group's capital is also in the cards to support the recovery.
Anne Rigail, Director General of Air France makes no secret of it: “We will need financial support quickly”, she acknowledges in the Figaro April 7. “Air France with 50,000 employees represents 1.6% of GDP. It is the first private employer in Île-de-France, “recalls the manager to justify this state intervention in a private company.
But he It is indeed a race against time: “Most European companies have little cash reserves, underline the analysts of the German rating agency Scope. To gain market share, they have invested a lot in 'expansion of their network and their fleet “. Admittedly, several measures have been taken to preserve liquidity, such as cutting marketing expenses, resorting to short-time working, renegotiating current aircraft orders, but the question of reimbursing tickets to customers for the holidays is also now being asked. of spring and summer. Air France and Lufthansa offer customers to postpone their reservations. Nearly 4 billion unconsumed tickets were registered at the end of 2019 in the accounts of Lufthansa and 3.3 billion for Air France-KLM.