Indian airlines await govt bailout as other countries open their purses

As governments across the world are giving out billions of dollars of bailouts to the aviation sector to protect jobs, the Indian government has not come out with any aviation sector package saying the promoters of Indian airlines which includes the likes of the Tatas, the Bhatia family-Rakesh Gangwal, and the Wadias are rich and don’t want to use their own money to save their airlines. The airlines, however, have received the RBI package on loan moratorium till September. Industry experts say after almost zero traffic in April, airline traffic has marginally improved to 30 per cent in July but not enough to pay for costs. Indian airlines are already cutting jobs.

We take a look at what each country is doing to help the sagging airlines sector:

United States:

$61 billion in bailouts for the airline industry announced.

Of this, $25 billion exclusively set aside to pay employees

$25 billion allocated for loans to the airlines, as well as payroll support for cargo airlines

US airports also will receive $10 billion from the government

There is an ongoing debate in the US Congress over a new $3 trillion stimulus plan as well as a proposal to renew several federal aid programmes that would otherwise lapse, including a temporary increase to jobless benefits that is set to expire in July

The Federal Reserve has said it would leave interest rates near zero for the foreseeable future as the central bank projected high unemployment for several years and a long slog back from the pandemic-induced recession

Airlines that accepted parts of a $25 billion aid package are prohibited from laying off staff through Sept. 30

Canada:

The Government covers 75 per cent of an employee's wages, up to $847 per week. The Canada Emergency Wage Service (CEWS) will allow airlines to re-hire employees and avoid layoffs during the crisis

The programme will be in place until August 29.

The Large Employer Emergency Financing Facility (LEEFF) to provide bridge financing, whose needs during the pandemic are not being met through conventional financing, in order to keep their operations going

The additional liquidity provided through LEEFF allows Canada’s largest businesses (including airlines), their workers and their suppliers to remain active during this difficult time, and position them for a rapid economic recovery

This programme is delivered by the Canada Development Investment Corporation, in cooperation with Innovation, Science and Economic Development Canada and the Department of Finance

Waived (airport) ground lease rents from March 2020 through to December 2020 for the 21 airport authorities that pay rent to the federal government

More time to pay income taxes

Canadian airlines are, however, waiting for an industry-specific aid package promised by the Government of Canada

United Kingdom:  

British Airways has been handed close to £35 million from the government’s furlough scheme as of May 14.

A further £300 million was handed to BA under the Covid Corporate Financing Facility (CCFF), a scheme allowing companies to sell commercial paper—unsecured, short-term debt that can be held for up to 12 months—to the Bank of England

The government has also pledged £75 million to charter special flights to bring home UK nationals from countries where commercial flights are unavailable, Until June 5, British Airways, EasyJet, Wizz Air and Ryanair had taken £1.8bn from the Bank of England’s CCFF

Govt will phase out the job retention scheme by October as the govt shifts gears from “support phase” to “stimulus phase”.

Germany:

The German government has taken a stake in Deutsche Lufthansa AG as part of a 9 billion euro ($9.77 billion) rescue package.

Singapore:

Singapore Airlines is raising about $6.3 billion through share and convertible bond sales. It has also cut salaries of its management team by as much as 30 per cent from April 1 and is in negotiations with aircraft manufacturers to adjust deliveries and payment schedules

Singapore's state investor Temasek Holdings and others will inject as much as $13.27 billion into Singapore Airlines (SIA) in the world's single-biggest rescue of an airline slammed by the pandemic

SIA said it would use the funding from the rights issues to beef up its capital and operational expenditure needs

United Arab Emirates: 

The state will grant unspecified financial aid to Emirates, and that the government is committed to providing the full support by injecting fresh capital.

Hong Kong:  

The government will buy 500,000 flight tickets directly from the city’s airlines as part of a stimulus worth billions of Hong Kong dollars to the crippled aviation sector

Cathay Pacific has initiated $5 billion in recapitalisation financing