The airlines send out a call for help

Les compagnies aériennes lancent un appel à l’aide

Photo: Rick Bowmer Associated Press
According to IATA, revenue from ticket sales is expected to decrease to 252 billion US$in 2020, compared to 2019.

Listed among the victims on the front line of the pandemic, the sars coronavirus, the airlines are counting on the support of the State in which the joint may be difficult, according to the experience observed in the United States. According to the international air transport Association (IATA, in English), 25 million jobs will be at stake if the travel restrictions extend over three months.

In its analysis released on Tuesday, the IATA estimated that about 65.5 million jobs that rely on industries, aviation, travel and tourism — including 2.7 million in the airline only — some 25 million could be lost due to the collapse of demand for air transportation due to the crisis of the COVID-19. This scenario is based on the assumption that the travel restrictions will extend over three months.

By large regions, the Asia-Pacific would be the most vulnerable with 11.2 million jobs are under threat, followed by Europe ($5.6 million), Latin America (2.9 million), North America and Africa (2 million in each area) and the Middle-East (900 000).

Significant losses

The IATA, which has 290 members, claiming 82 % of the global aviation traffic, resumed its estimates already published. Thus, according to the same scenario, on the whole of the year, airlines are expected to see the income of sale of tickets decrease to 252 billion US $(-44 %) in 2020 compared to 2019. “The second quarter is the most critical, the demand falling from 70 % at the worst of the crisis and airlines are shedding cash reserves of US $61 billion “, she says. According to its projections, the capacity is expected to decrease by 65 % in the second quarter compared to the corresponding quarter of 2019, 40 % the third and 10 % in the fourth compared to the corresponding quarter of 2019.

Airline companies ask governments to provide immediate financial assistance to help them remain viable and able to lead the recovery when the pandemic will be stemmed. In particular, the IATA request direct financial support, loans and loan guarantees and support to the corporate bond market, as well as tax cuts.

The blurring persists in the United States

The exercise does not flow out of the source, as evidenced by the american example. In the United States, the airlines are involved in negotiations perilous with the federal government, who is determined to take equity stakes in their capital in exchange for its financial assistance to offset the losses due to the coronavirus.

A tussle plays out behind the scenes between the leaders of the air and the Treasury, in charge of distributing the 2200 billion dollars of the plan of economic aid enacted at the end of march by Donald Trump, according to industry sources. This plan provides $ 50 billion to the companies, of which half must be used to preserve jobs until the 30th of September.

If the Treasury refuses to talk about the bailout, the ministry wants to nevertheless avoid being accused of signing a blank cheque. One of the counterparties in the discussion is an equity capital, the extent of which will tell whether this is nationalisation or not. In all cases, this hypothesis is considered a red line by the leaders, according to industrial sources, because they are afraid that the State shareholder is a foil for the financial markets. American Airlines, United Airlines, Delta Air Lines and Southwest, the four largest companies in america, are reluctant, explain the same sources, to accept public assistance despite the erosion brutal of their income.

Delta, American, United and Southwest are in a weak position in these negotiations : their survival is threatened and they have spent 39 billion dollars in the past five years to pamper to their shareholders through share repurchase programmes, was calculated by S&P Dow Jones Indices, rather than guard against a possible crisis. These disabilities are of a nature to encourage the Treasury to tighten its requirements, which would push these companies prefer to declare bankruptcy, are afraid of the unions and elected democrats.

With Agence France-Presse

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