UK rules out broad bailout for airlines
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In contemplating support for airlines, the government will consider factors including whether a company makes a material contribution to the UK.
PHOTO: REUTERS
LONDON (BLOOMBERG) - Britain has ruled out immediate direct aid to the aviation sector as the coronavirus outbreak wipes out all but a handful of UK flights.
In a letter to airlines and airports seen by Bloomberg News, Chancellor of the Exchequer Rishi Sunak said on Tuesday (March 24) that firms must first tap all commercial avenues to raise funds, and that any assistance the state does provide will be structured to protect taxpayer interests.
"The government is prepared to enter negotiations with individual companies seeking bespoke support as a last resort, having exhausted other options," Sunak said.
The International Air Transport Association said earlier that airlines could take a US$252 billion (S$365 billion) hit to revenue this year from the pandemic, warning that a liquidity crunch is just around the corner and urging governments to take "massive action" to keep the industry functioning.
Sunak held out some hope that carriers will qualify for assistance through the government's Covid Corporate Financing Facility, part of a 330 billion-pound ($390 billion) national program that's being led by the Bank of England.
He said he understood there was confusion about whether airlines can access the funds, which are for companies with an investment-grade credit rating, and that he's in discussion to resolve the uncertainty.
In contemplating support for airlines, the government will consider factors including whether a company makes a material contribution to the UK, how important it is to connectivity, and whether aid would be fair to other firms.
The aviation industry will benefit from measures including wage support and deferred tax payments, and Sunak said that Transport Secretary Grant Shapps is open to discussing some industry-wide measures.
EasyJet Plc said in a statement it was reviewing the letter alongside last week's measures, and that its "immediate focus is on liquidity and protecting jobs."
Virgin Atlantic Airways and British Airways said they couldn't immediately comment, while the UK Airport Operators Association said the government had performed a "disappointing" u-turn over support for the industry.
The Treasury press office didn't have an immediate response.
