The COVID-19 pandemic has been catastrophic for the airline industry. Passenger numbers are almost at zero, with only a handful of relief flights still airborne. Airlines are appealing to governments for support but there is no guarantee that help will materialise.

Virgin Atlantic made it clear last week that they have appealed for government support, suggesting emergency credit facilities to a value of £5-7.5 billion for the UK aviation sector.

It is understood that Virgin Atlantic is expected to ask for a government bailout in the coming days, worth hundreds of millions of pounds, and it is likely that other UK airlines will be seeking the same state aid.

Richard Branson has said he will inject $250 million into the Virgin group, including the new Virgin Voyages cruise line, but more financial help will be needed.

UK Chancellor of the Exchequer, Rishi Sunak, has told airlines only to ask the government to step in as “a last resort” and “exhaust other options” first, including exploring other avenues such as raising money from shareholders.

The government has also said its emergency business measures, including a Bank of England scheme for firms to raise capital and employee wage subsidies, are available for airlines.

But Will This be Enough?

IATA CEO, Alexandre de Juniac, said:

“There is a small and shrinking window for governments to provide a lifeline of financial support to prevent a liquidity crisis from shuttering the industry.”

IATA CEO, Alexandre de Juniac

Grant Shapps, Secretary of State for Transport, told MPs on the Transport Select Committee that nothing had been ruled out in its response to coronavirus for the aviation sector, including a state stake in airline ownership.

A Virgin Atlantic spokesperson commented:

“The aviation industry is facing unprecedented pressure. We are appealing to the Government for clear, decisive and unwavering support. Our industry needs emergency credit facilities to a value of £5-7.5bn, to bolster confidence and to prevent credit card processors from withholding customer payment.”

Virgin Atlantic spokesperson

There’s no doubt about it. The coronavirus has had a apocalyptic affect on aviation. Airlines, including Virgin Atlantic, are playing a critical role in delivering vital medical supplies, but this doesn’t compensate for the almost total loss of passengers flying.

Decisions made in the coming days and weeks will be critical for airlines’ survival; these decisions will shape how the aviation industry looks, when the world emerges from the COVID-19 pandemic.

BoardingArea