Aer Lingus owner not on bailout trail as European airlines hunt for cash 

Ryanair chief Michael O’Leary has said that airlines should rely on cash reserves and shareholders rather than seeking state bailouts

Aer Lingus owner IAG and Ryanair have shunned state bailouts. Picture: PA

Aer Lingus and British Airways owner IAG has said that it has no current interest in receiving any government bailout or state aid, despite a potential future need to boost its finances past its recent €2.7bn rights issue due to the continued impact of Covid-19 on the aviation industry.

The question of state aid for airlines is front and centre again, with Ryanair group chief executive Michael O’Leary urging the UK government not to financially help struggling airlines, and Norwegian Air battling for survival after Norway’s government said it will not give any more money to support the stricken carrier.

IAG — which also owns Spanish carriers Iberia and Vueling — last month raised gross proceeds of €2.7bn in a share sale to existing investors. 

However, it has since said it may have to raise even more funds should Covid continue to impact business through further or prolonged national lockdowns.

A spokesperson refused to comment further, but it is understood that IAG is not focused on government bailouts or state aid packages — beyond employee wage subsidies — at this time.

In the UK, EasyJet has said government-funded financial support for the airline industry is urgently needed, while an airline and airport representative group wants government action through loans or grants.

Michael O’Leary said the British government should not bail out airlines, and said carriers should rely on their own cash reserves and their shareholders to survive the crisis.

Norwegian Air, which has been hit hard by the coronavirus crisis and has grounded most of its fleet, said in August that it would run out of cash in the first quarter of 2021 unless it could secure fresh funds and has held talks with the country's government in the hope of winning support.

“That the government has decided to reject the request for funds is disappointing and feels like a punch in the gut for everyone at Norwegian,” said CEO Jacob Schram.

“The company and the board will turn every stone to get through this situation,” he said, adding that the budget airline is not out of cash yet.

Asked whether the company was at risk of bankruptcy, Mr Schram said he would not rule out any potential outcomes.

“But we need ventilator support to get through the winter,” he said.

Norway's Industry Minister Iselin Nyboe said: “It is a tough message to get. But we are answerable for the responsible use of public funds.

"Norwegian Air has a financial structure that makes it risky for us to go in with support.”

Meanwhile, Ryanair has cancelled all flights between Denmark and the UK after Britain ordered that its flight crews on those routes must quarantine for 14 days due to widespread coronavirus outbreaks at Danish mink farms. The airline said the move was “bizarre and baseless”.

Additional reporting Reuters