UK airlines call for multibillion bailout to survive Covid-19 crisis

Sector expected to ask Boris Johnson for immediate aid of up to £7.5bn to prevent wipeout

UK airline bosses are calling for an immediate multibillion-pound emergency bailout to prevent the industry potentially being wiped out by the coronavirus pandemic.

With the international travel industry facing a widespread shutdown, trade body Airlines UK has called for urgent action “now,” saying the government’s “prevarication” and “bean counting” had to stop.

In another sign of the turmoil in the travel industry, holiday firm TUI Group announced last night it was temporarily suspending the “vast majority of all travel operations until further notice”.

This includes the company’s package holidays, cruises and hotel operations. “This temporary suspension is aimed at contributing to global governmental efforts to mitigate the effects of the spread of Covid-19,” said Hanover-based TUI, which also plans to apply for ‘state aid guarantees’ to support its business.

Peter Norris, the chairman of Virgin Atlantic Airways’ majority shareholder, Virgin Group, will write to the prime minister on Monday to warn that the sector needs immediate financial aid of between £5bn and £7.5bn.

It is understood the letter – also signed by Shai Weiss, Virgin Atlantic’s chief executive – will call for a credit facility to be made available, alongside other help such as measures to make sure credit card companies that are fearful of the possibility of some airlines going bust do not withhold millions of pounds relating to payments their customers have made for future flights and holidays. It is proposed the emergency financing would be repaid once something close to normal service has resumed.

In its message to ministers, Airlines UK said: “The time for action is now. No more delays or prevarication or bean counting. We’re talking about the future of UK aviation – one of our world-class industries – and unless government pulls itself together, who knows what will be left of it once we get out of this mess.”

Meanwhile, the Unite union said that without the government’s help thousands of jobs were under threat. Its comments come on the back of a call from pilots’ union Balpa for ministers to act immediately to prevent UK aviation “being wiped out” by the pandemic.

Unite’s four-point plan includes a proposal that the government should consider taking a financial stake in airlines and airports to help ensure their survival.

Travel businesses are facing a perfect storm of blows and setbacks, with the US extending its Europe travel ban to include the UK and Ireland, a number of South American countries bringing in flight restrictions, and Australia joining New Zealand in requiring all people entering the country to self-isolate for 14 days.

On Sunday, Ryanair said that in response to the Spanish government’s decision to lockdown the entire country to contain the spread of the virus, the group – including its Buzz and Lauda airlines – had been forced to “severely reduce” flights to and from Spain, the Balearic Islands and Canary Islands from midnight on Sunday to midnight on Thursday. Ryanair apologised and said it was emailing all affected customers to advise them of their options.

The Scandinavian airline SAS said on Sunday that it would temporarily halt most of its traffic starting from Monday, triggering temporary lay-offs of up to 10,000 employees, or 90% of the total workforce.

British Airways has already warned staff it is in a fight for survival and expects to cut jobs and ground an unprecedented number of planes.

American Airlines, the second biggest in the world, said on Saturday that it would start implementing a phased suspension of almost all long-haul international flights from Monday, amid reduced demand and travel restrictions due to the ongoing coronavirus outbreak.

Meanwhile, on Sunday it was reported that ministers in the Netherlands had said they would do everything necessary to keep Air France-KLM and Amsterdam’s Schiphol airport operating, while the Italian government was said to be close to taking full control of ailing airline Alitalia.

A UK government spokesman said: “We recognise how difficult the current situation is for the aviation sector and, across government, we are engaging with the sector’s leadership to support workers, businesses and passengers.

“We have influenced the European commission to relax flight slots, and HMRC is ready to help all businesses, including airlines, and self-employed individuals, experiencing temporary financial difficulties due to coronavirus.”

Contributor

Rupert Jones

The GuardianTramp

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