The US has offered $58 billion to airline companies in a bid to help them come out of ongoing financial crisis being suffered owing to coronavirus outbreak. Alongside the US, Singapore has promised to help its airline industry to fight the pandemic. Also, Australia has pledged to ease competition rules during this moment of crisis.
Airline companies across the globe have been suffering because of cancellation of hundreds of flights owing to the travel restrictions imposed by governments following the coronavirus outbreak. The deadly coronavirus has so far infected more than 468,000 people, with more than 21,000 deaths. Also, because of lockdowns by different governments following the coronavirus outbreak, many airline companies have completely grounded their fleet.
What does the package contain?
The $58 billion rescue package is aimed at helping airline companies from going bankrupt after being hit by the coronavirus pandemic. Also a large sum has been allotted to cover their staff wages and also help convert passenger planes turn cargo liners to fight the coronavirus crisis. Of the $58 billion, the bill grants $25 billion in the form of loans and loan guarantees for passenger airlines.An additional $4 billion has been allocated by the US for cargo liners, which too have somewhat suffered because of the coronavirus outbreak.
Moreover, $25 billion has been allocated in grants for airlines to pay their employees through September to survive the cash crunch. Besides, an additional $17 billion has been set aside to help companies that are critical to maintaining national security. Boeing is likely to be one of the beneficiaries in this case. Per the bill, airlines getting this aid will be barred from buying back shares of their own stock from at least a year after the loan is paid off. Also, they will not be allowed to issue dividends to shareholders while receiving this grant.
Will this help the airlines?
Coronavirus has been taking its toll on all businesses across the globe and airlines seem to be the biggest casualties. Most airline companies have been cancelling flights over the past couple of months, as governments are imposing restrictions and travel bans following the coronavirus outbreak.This has seen a number of airline companies seeking government aid to bail them out of the crisis.
According to International Air Transport Association (IATA), the coronavirus outbreak will cost the global industry $252 billion in revenue loss this year. Following the spread of coronavirus in other Asian and European countries along with the US, a number of airlines are laying off or are asking workers to go on leave without pay. The $58 billion aid by the US is certainly going to make airline companies now to somewhat fight the coronavirus pandemic.
Other countries too promise help
Following the coronavirus outbreak, the IATA had written to 18 countries in the Asia Pacific region to provide emergency support to their airlines. Singapore is one of the first countries to have come in support of it domestic airlines to fight the coronavirus.
Singapore's finance minister Heng Swee Keat said that the domestic carrier Singapore Airlines will soon be announcing a corporate action, which will be in support with state investor Tamsek Holdings to bail out the airlines from the crisis.
Australia and New Zealand too has joined other counties in announcing some kind of financial aid to help their respective airline companies. Australia in fact has taken a surprising more. The country's competition regulator said that it would be allowing Qantas Airways, Virgin and Regional Express to coordinate flight schedules and share revenues in 10 regional routes.
Delta Airlines and Air New Zealand have joined other airlines in offering cargo flights and charters on passenger planes in an attempt to raise revenues following the coronavirus outbreak. Abu Dhabi-based Etihad Airways will also be operating 34 weekly cargo-only flights to countries like India, Singapore, Thailand, South Korea, Philippines and Indonesia.