The government is planning a special loan for the nation’s six airlines as their businesses have been severely affected by the COVID-19 outbreak, Deputy Minister of Transportation and Communications Huang Yu-ling (黃玉霖) said yesterday.
Details of the bailout are to be decided at an Executive Yuan meeting tomorrow, he said on the sidelines of a meeting of the Legislative Yuan’s Transportation Committee.
The Central Epidemic Command Center (CECC) announcement on Saturday that he had raised the travel advisory for 27 European nations and Dubai to a level 3 “warning,” effective today, is expected to worsen the plight of airlines already hurt by massive numbers of flight cancellations and ticket refunds caused by the outbreak.
Photo: Liu Hsin-de, Taipei Times
Previously, the Ministry of Transportation and Communications (MOTC) had budgeted a total of NT$4.863 billion (US$160.92 million) to subsidize the airlines, as well as several items for the nation’ airports, including aircraft landing fees, land lease fees, airport facility usage fees and royalties, as well as the purchase of disease-prevention materials.
Asked if the bailout would be capped at NT$30 billion, as some local media have reported, Huang said that the airlines are still calculating the exact amounts they need to weather the crisis.
Premier Su Tseng-chang (蘇貞昌) supports the ministry’s proposal, Huang added.
“The airlines have experienced a massive reduction in revenue in the past few months due to the COVID-19 outbreak, which has led them to have low cash flow as well. The special loan program would fund paychecks for their employees and help them get though this difficult time,” he said.
So far, the nation has managed to keep about 20 percent of its airlines’ transport capacity to China, while more than 50 percent of their international flights have been canceled, ministry statistics showed.
The Center for Aviation, a market intelligence agency for the aviation and travel industry, yesterday forecast that most of the world’s airlines would be bankrupt by the end of May, unless coordinated government and industry action is taken now.
“As the impact of the coronavirus and multiple government travel reactions sweep through our world, many airlines have probably already been driven into technical bankruptcy, or are at least substantially in breach of debt covenants,” the center said. “Cash reserves are running low quickly as fleets are grounded, and what flights there are operate at much less than half full.”
“Forward bookings are far outweighed by cancelations and each time there is a new government recommendation it is to discourage flying. Demand is drying up in ways that are completely unprecedented,” it said. “Normality is not yet on the horizon.”
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