An $85 Billion Airline Rescue May Only Prolong the Pain

Governments have devoted more than $85 billion to propping up airlines after the coronavirus pandemic wiped out travel demand and grounded jetliner fleets. But with job cuts racking up — 20,000 were announced in Europe this past week — a debate is raging over whether opening the spigot will do more than merely delay the inevitable.

Some 80% of flight capacity remains idled, while a rebound in China has stalled, leading the International Air Transport Association to suggest the recovery will be a tortuous one. Given the financial impact and safety measures likely to be required, it could be three years before the industry sees a sustainable revival, according to Delta Air Lines Inc. Chief Executive Officer Ed Bastian.

Tension is also mounting over whether the cash windfall will interrupt a necessary thinning out of the sector by propping up weaker airlines, many state-owned or former flag carriers, while their leaner rivals rely on their own resources. Some otherwise-unviable routes would be lost without aid, along with jet orders that would help satisfy carbon-reduction goals of state backers.

Ryanair Holdings Plc CEO Michael O’Leary has challenged the notion of state aid as inherently unfair and detrimental to pricing power for those carriers still standing on their own feet.

Here’s a guide to who is borrowing what, where the jobs ax has fallen, and what airline bosses are saying about a recovery.

Air France-KLM

  • State Aid: Set to get as much as 11 billion euros ($12 billion) from the French and Dutch governments.
  • Jobs: KLM plans to cut up to 2,000 posts and has taken advantage of furlough programs. No word yet on cuts at Air France.
  • Recovery: CEO Ben Smith told Les Echos that it could take two years or more for the industry to recover.
  • Share Price: Down 53% this year.


  • State Aid: The airline is being nationalized, with the government set to take full control in June. Has already had more than 2.1 billion euros since entering administration in 2017.
  • Jobs: Due to lay off more than 6,800 workers, unions said in March.
  • Recovery: Italy’s industry minister was upbeat last week, saying the virus means Alitalia will now be in the same spot as other airlines.

American Airlines

  • State Aid: The biggest U.S. carrier has secured $5.8 billion dedicated to payroll support and is negotiating terms for a separate $4.75 billion federal loan.
  • Jobs: About 39,000 workers have voluntarily taken time off, reduced hours or early retirement. American is evaluating whether it will have to lay off any of its nearly 130,000 workers.
  • Recovery: CEO Doug Parker says he expects air travel demand to be “suppressed for quite some time.”
  • Share Price: Down 58% through the end of April.

Cathay Pacific

  • State Aid: No bailout, though Hong Kong granted a package worth HK$2.6 billion ($340 million) to the aviation industry including waivers on airport charges and other fees.
  • Jobs: Staff asked to participate in a leave program through June 30.
  • Recovery: CEO  Augustus Tang has said the timeline for a revival in demand “remains impossible to predict.”
  • Share Price: Down 20% this year.

Chinese Big Three

  • State Aid: No bailouts have been announced for China Southern Airlines Co., China Eastern Airlines Corp. and Air China Ltd., though the carriers posted a collective $2 billion loss for first quarter.
  • Jobs: Again, no cuts publicly announced.
  • Recovery: Chinese carriers have acknowledged the disruption to travel, while stopping short of issuing dire forecasts.
  • Share Price: Air China is down 29.6% this year, China Southern down 26% and China Eastern down 25%.

Delta Air Lines

  • State Aid: Atlanta-based Delta will receive $5.4 billion in U.S. payroll aid. It’s also applying for a $4.6 billion federal loan, but has until September to decide whether to take it.
  • Jobs: More than a third of Delta’s workforce, or 37,000 people, have taken unpaid leave ranging from 30 days to one year.
  • Recovery: In his warning that a recovery may take three years, Bastian has said it will depend on customers “feeling safe, both physically and financially, to begin to travel at scale.”
  • Share Price: Delta shares were down 56% for the year as of April 30.

Deutsche Lufthansa

  • State Aid: The governments of Germany, Switzerland, Austria and Belgium are together looking at a 10 billion-euro rescue.
  • Jobs: The group says it may need to shrink the workforce by 10,000 to survive the crisis.
  • Recovery: CEO  Carsten Spohr says a return to normal may take until 2023.
  • Share Price: Down 50% this year.


  • State Aid: Has raised 600 million pounds ($750 million) through the U.K. government’s Covid Corporate Finance Facility.
  • Jobs: Flights grounded with staff furloughed; no news yet on actual job losses.
  • Recovery: CEO  Johan Lundgren said the fleet won’t recover to pre-crisis levels until until 2022.
  • Share Price: Down 60% this year.

Emirates and Etihad

  • State Aid: Dubai has said it will provide financial support for Emirates. No bailout announced for Abu Dhabi-based Etihad
  • Jobs: Salaries have been cut at Emirates but carrier says posts won’t go, whereas Etihad has warned it “can’t avoid” job cuts.
  • Recovery: Demand won’t return to former levels until 2023, Emirates President Tim Clark and Etihad CEO Tony Douglas said in a joint statement.


  • State Aid: Secured 1.1 billion euros in Spanish government-backed loans for its Iberia and Vueling arms.
  • Jobs: BA plans to eliminate as many as 12,000 jobs, having furloughed 22,000 staff. The BBC reported that the carrier is also considering closing its secondary hub at London Gatwick airport.
  • Recovery: Passenger numbers could take “several years” to regain 2019 levels, IAG has said.
  • Share Price: Down 66% this year.

Norwegian Air, SAS

  • State Aid: Norwegian is racing to push through restructuring plans to unlock the bulk of a 3 billion-krone ($290 million) package in government loan guarantees. Rival SAS has agreed 3 billion kronor ($300 million) in guarantees from Sweden and Denmark and $146 million from Norway.
  • Jobs: SAS is eliminating 5,000 jobs or 40% of the workforce. Norwegian has placed pilot and cabin-crew companies in Denmark and Sweden into bankruptcy protection, affecting about 1,500 pilots and more than 3,000 cabin crew.
  • Recovery: Norwegian reckons most of its fleet will remain grounded for the next year and doesn’t expect a full recovery until 2022. SAS says it’s preparing for what may be years of sluggish demand.
  • Share Price: Norwegian Air has slumped 86% so far this year. SAS is down 41%.


  • State Aid: No bailout.
  • Jobs: Has furloughed most of its 30,000-strong workforce.
  • Recovery: Sees the impact of the virus extending into fiscal 2021, but may benefit from reduced competition after rival Virgin Australia entered administration after being refused a state loan.
  • Share Price: Down 49% this year.


  • State Aid: Europe’s biggest discount airline hasn’t sought state support and says no other carrier should get it either.
  • Jobs: The Irish company is cutting 3,000 posts or 15% of the total workforce.
  • Recovery: CEO Michael O’Leary says the market may remain flat for as long as 18 months.
  • Share Price: Down 29% this year, the least among Europe’s top six airlines.

Singapore Airlines

  • State Aid: Government-owned Temasek Holdings Pte., the carrier’s biggest shareholder, has backed a plan to raise about S$8.8 billion ($6.2 billion) by issuing new stock.
  • Jobs: Measures include compulsory unpaid leave for pilots on varying days every month. In all, about 10,000 employees will be affected.
  • Recovery: Says it’s unclear when normal operations will resume.
  • Share Price: Down 32% this year.

Southwest Airlines

  • State Aid: The discounter is receiving $3.2 billion in federal aid for payroll support. It will apply for an additional $2.8 billion U.S. loan but won’t decide until the fall whether to use it.
  • Jobs: About 10,000 workers have taken voluntary leaves or partial-pay options. Southwest is considering options for longer-term time away and early retirement.
  • Recovery: CEO  Gary Kelly sees business travel taking five or more years to claw its way back.
  • Share Price: Down 42% this year through April 30, the best performance among the five largest U.S. carriers.

United Airlines

  • State Aid: Expects to get $5 billion in U.S. grants and low-interest loans, and has applied to borrow up to $4.5 billion from the U.S. Treasury.
  • Jobs: Over 20,000 employees have volunteered for leave and thousands more are on reduced hours. Without a rebound, job cuts are likely once federal payroll support runs out on Sept. 30.
  • Recovery: Planning for the possibility of zero revenue in 2021. Unsure when demand will return.
  • Share Price: Down 70% this year, the worst performance among major U.S. carriers.

Virgin Atlantic

  • State Aid: Seeking about 500 million pounds U.K.-backed support, which has told it to do more to raise cash privately and from within the Virgin Group.
  • Jobs: Struck a deal with staff to take unpaid leave, a move that has stoked a backlash against billionaire founder  Richard Branson.
  • Recovery: Largely dependent on the North Atlantic travel market, and the speed of a rebound in business travel.
  • Share Price: Closely held.

— With assistance by Mary Schlangenstein, and Siddharth Vikram Philip

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