Governments step up aid to airlines, with the US offering US $ 58 billion to avoid a fall in the sector

Several governments have stepped up efforts to help airlines affected by a coronavirus travel crash, with the United States offering $58 billion in aid, Singapore pledging to keep its fleet running, and Australia by easing competition rules.

AirAsia, the region’s largest budget airline, was the last to announce cuts in its flights in response to the deepening crisis caused by the pandemic and said some units will stop flying altogether for a while.

“No one can survive this for more than a few months, when you have an unprecedented 95% or even 100% decrease in passenger numbers and you have a lot of fixed costs,” said Brendan Sobie, an aviation analyst in Singapore.

In a desperate attempt to preserve some revenue and keep global supply chains operational, Delta Air Lines, Air New Zealand and Etihad Airways of Abu Dhabi joined a list of companies that have turned passenger planes into cargo aircraft.

Approximately half of the world’s air cargo normally travels in the holds of passenger planes, so the cancellation of flights has led to a sharp reduction in cargo capacity, which have negative effects on food and supply chains for the industry.

“For airlines, this is the apocalypse,” said Alexandre de Juniac, director general of the International Air Transport Association (IATA), which represents airlines around the world. “Travel restrictions and evaporation of demand mean that beyond merchandise there is almost no business.”

In an unprecedented decision, the United States Senate on Wednesday approved a $58 billion aid package, half in the form of grants to cover some 750,000 airline staff salaries. Those who receive funds cannot fire employees before September 30 or change collective bargaining contracts.

The law restricts the repurchase of shares, dividends and executive payments, and allows the government to take shares, guarantees or other compensation as part of the rescue package.

The House of Representatives is expected to approve the measure on Friday, which President Donald Trump promised to enact.

IATA, which estimates that the pandemic will cost the global industry some $252 billion in lost revenue this year, said it had written to 18 countries in the Asia-Pacific region, including India, Japan and South Korea, asking for help. 

Sign Up for Our Newsletters

You May Also Like

Caterpillar raises profit forecast for 2018 after quarterly result better than expected

On Monday, Caterpillar Inc reported a quarterly profit increase that exceeded market…

Fiat Chrysler agreed to pay US $800 million to resolve claims about illegal software use

Fiat Chrysler Automobiles NV agreed to pay US $800 million to resolve…

South Korea fines the German company BMW with US $10 million dollars

The government of South Korea fined has the German automaker BMW for…