Stricken airlines call for tax relief to limit bankruptcies

112

European airlines demanded urgent tax relief to avoid multiple bankruptcies, as coronavirus disruption continued to spread around the global industry on Tuesday.

As the region’s transport ministers prepared to discuss financial support, the Airlines for Europe group called for widespread tax deferrals “to ensure that as many airlines as possible survive” the crisis.

The call came as the aviation industry’s main global body, IATA, said total support needed from governments worldwide could reach $150-200 billion.

Appeals from the sector are becoming more urgent as airlines continue to ground planes, slash routes and jobs in response to unprecedented travel restrictions to limit the virus’s spread, including the closure of European Union borders.

Job cuts are adding to pressure on governments. IAG-owned British Airways informed unions on Tuesday it planned to make an unspecified number of pilots redundant.

“We are extremely disappointed that a company like BA with a strong balance sheet and cash reserves has rushed into redundancy consultation,” said BALPA pilot union chief Brian Sutton.

“This is the biggest crisis the aviation industry has faced in decades,” he added. “Without more government support we fear the impact will be far greater.”

Most major airlines have made drastic, unprecedented schedule cuts – often bringing operations to a near halt – as restrictions bite and demand dries up.

Singapore Airlines cut more capacity on Tuesday, as Emirates suspended dozens of destinations and Canada’s WestJet halted international services.

The Philippines’ Cebu Air cancelled all flights starting March 19, and Jetstar Asia announced a three-week shutdown after parent Qantas cut its own capacity by 90%.

JOBS PRESSURE

U.S. airlines have asked Washington for $50 billion in federal grants and loans, plus tens of billions in tax relief.

In a letter to political leaders, United Airlines management and unions pleaded for urgent financial support to “allow United to continue paying our employees as we weather this crisis, protecting tens of thousands of people.”

Boeing has also held talks with White House officials on possible assistance. European arch-rival Airbus said on Tuesday it was halting production in France and Spain as coronavirus lockdowns affect workers and suppliers.

The global airline industry will need “something like $150-200 billion” from governments including loan guarantees, IATA head Alexandre de Juniac told reporters on Tuesday.

The coronavirus is “now covering markets that represent 94% of global passenger revenue,” the Geneva-based organisation’s chief economist Brian Pearce said in the same presentation.

Three-quarters of airlines now have liquidity covering less than three months of unavoidable fixed costs, Pearce said. “The majority are in a very fragile place.”

EU transport ministers will meet by video-conference on Wednesday, an official said. Governments including France, Germany, the Netherlands and Britain have expressed readiness to extend financial support to airlines.

Lufthansa is expected to receive a government cash injection, one German banker told Reuters. The flag carrier is also making plans for an emergency cargo airlift on a scale unseen since the 1948-49 blockade of Berlin.

REUTERS