Airlines Business & Finance News

UK Rejects Aviation Industry Bailout

The UK finance minster has rejected calls from the aviation sector for an industry-wide cash injection, in a letter to companies in which he warned it would only receive “bespoke” help to deak with Covid 19.

In the letter Rishi Sunak said that airlines and the broader sector needed to exhaust other avenue such as tapping credit lines and accessing support from their existing shareholders. One media outlet reported that EasyJet’s decision to go ahead with paying a dividend had hardened opposition to a universal bailout.

“Given the significant importance of the aviation sector to our economy and economic recovery, the government is prepared to enter negotiations with individual companies seeking bespoke support as a last resort, having exhausted other options,” Sunak wrote.
“However, further taxpayer support would only be possible if all commercial avenues have been fully explored, including raising further capital from existing investors and discussing arrangements with financial stakeholders.”

Sunak’s letter was instantly criticised by the UK the Airport Operators Association which termed the move a “U-turn”, chief executive of Karen Dee said:

“After having publicly announced a support package for airports and airlines, we’re surprised by where we find ourselves today. Our industry will now have to fight on its own to protect its workforce and its future.

“With passenger numbers approaching close to zero, UK airports have seen a major drop in revenue. They are taking unprecedented steps to safeguard airport staff and operations through this crisis, which could include in some cases considering shutting down for a period of time. This could have major impacts for UK communities and businesses.

Dee said that only does the decision today leave airports struggling to provide critical services, it would hamper the UK recovery.

“We urge the Government to reconsider and at the very least provide a comprehensive package of support for airports and ground-based services, to ensure the UK’s critical aviation infrastructure is ready to take off once the COVID-19 pandemic recedes,” said Dee.