in Aircraft values, Lease Rates & Returns , Aviation Banks and Lenders
Thursday 3 September 2020
Covid-19 bailouts: Dubai gives Emirates $2bn, Avianca gets $370m loan
This is the twenty-third updated summary of airline demands for state support and bailout proposals by governments around the world.
The tables attached contain the demands or stakeholder approaches to date of 140 carriers (including airline subsidiaries inside holding groups) and 33 industry associations or stakeholders, as well as the policies or proposed measures of 82 countries and EU-level entities. Ishka estimates that as of 3rd September governments are preparing or executing $128.67 billion in confirmed bailouts or assistance measures for airlines globally. Unconfirmed reports and allocations deemed likely suggest the total tally could be as high as $160.08 billion.
Ishka’s definition of government support for airlines encompasses any monetarily quantified relief measure provided by states or state-backed entities, including deferrals of taxes or operational charges, state-backed commercial loans and the nationalisation of airlines.
The tally of confirmed bailouts grew by $2.37 billion since last week’s update with the following additions:
- Emirates received 7.3 billion dirhams ($2 billion) from the Government of Dubai in March, a bond prospectus seen by Reuters in late August showed. The allocation reportedly followed a tweet by the Crown Prince of Dubai, Sheikh Hamdan bin Mohammed Al Maktoum, on March 31st which announcing an equity injection “and more measures” for the airline. The allocation was not publicly known until the recent report.
- The Colombian government has approved the granting to Avianca an 18-month loan for $370 million to take place under the Debtor in Possession financing provided for under Chapter 11 of the Bankruptcy Code of the United States.
The tally of bailouts still in the works (those yet to be confirmed) including likely allocations remained unchanged at $32.67 billion.
The Ishka View
Airlines in Norway appear on a frantic search for further state support but this time they do not want to put themselves into deeper debt. According to a TV2 report relayed by Norwegian aviation site Hangar.no, the country’s three biggest airlines will next week table a demand for government “grants”, not “further loans or other forms of assistance.” This plea for non-refundable support is also echoed by IATA. On 1st September, the global trade body commended government relief as having been “a critical lifeline” so far for airlines but warned that the state aid is now “quickly running out.” As it called for new financial support, IATA underlined that new measures “must not increase already ballooning debt levels.” Ishka noted in recent weeks increasing efforts by airlines to seek further state aid, particularly in the US where CARES Act payroll support programme (PSP) grants run out at the end of this month. Both in the US and Norway the airline industry will be testing whether governments are friendly to the idea of carriers requesting a second round of taxpayer support. Grants like the ones to be tabled in Norway could be a solution to maintain minimum air services, but they are likely to be a harder ask by carriers serving routes crowded by competitors or to leisure destinations.
Note to readers: Ishka’s airline bailout series will now be updated fortnightly with the next update due on 17th September.
State support tally
The charts below tally financial support for airlines (converted to US dollars) confirmed by 51 nations or public entities and, separately, proposed or unconfirmed financial assistance by 14 states. For a detailed table: Click here to download the tables.
State Support
To view the latest table containing policies or proposed measures of 82 countries and EU-level entities: Click here to download the tables.
Airline requests
To view the latest table containing demands or stakeholder approaches of 140 carriers (including airline subsidiaries inside holding groups) and 33 industry associations: Click here to download the tables.
Sign in to post a comment. If you don't have an account register here.