Shattered airlines were left counting the cost of government support as countries from the US to New Zealand set out conditions for bailouts needed to absorb the shock of the COVID-19 pandemic.
Conditions include provisions that loans might convert to government equity stakes, while US airlines cannot increase executive pay or provide “golden parachutes” for two years.
Air New Zealand’s bailout depends on the company suspending its dividend and paying interest rates of 7 to 9 percent.
Photo: Bloomberg
New Zealand yesterday offered its national carrier a NZ$900 million (US$522.5 million) lifeline, which New Zealand Minister of Finance Grant Robertson said would help it survive after the government banned all nonresident arrivals to the country.
Under a US$58 billion US proposal for passenger and cargo carriers, the US Department of the Treasury could receive warrants, stock options or stock.
Norway is to back airlines with credit guarantees worth up to 6 billion Norwegian crowns (US$543.2 million), half of them to Norwegian Air Shuttle. Conditions include raising money from commercial banks and the equity market.
Finland, which owns a 56 percent stake in Finnair, said that it would guarantee a 600 million euro (US$644 million) loan for the state carrier.
The International Air Transport Association has forecast that the industry would need up to US$200 billion of state support, piling pressure on governments facing demands from all quarters and a rapid worsening in public finances as economies slump.
“Money is very tight in most countries, so governments need to step back and be hard-nosed about any form of rescue ... but it all must come with strict conditions, or strings, attached,” aviation consultancy Endau Analytics founder Shukor Yusof said in an e-mail.
Even with financial assistance, airlines worldwide are placing thousands of workers on unpaid leave as they slash passenger capacity, deepening the shocks to local economies.
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