Aer Lingus in talks with Government over further financial support

Aer Lingus in talks with Government over further financial support

Tánaiste Leo Varadkar has said Aer Lingus won't be allowed to fail

Aer Lingus is in talks with the Government over receiving further financial support, Tánaiste Leo Varadkar has said.

Earlier this month, the Ireland Strategic Investment Fund provided a €150m three-year loan to Aer Lingus, which is also a recipient of the State’s wage subsidy scheme.

“To say very clearly, Aer Lingus will not be allowed to fail. It is already receiving substantial financial support from government. Discussions are underway on further support for the company so it is there when we need it again,” Mr Varadkar told the Dáil.

The UK airline industry has stepped up a campaign to persuade British prime minister Boris Johnson that travel should be included in his plan to reopen the country’s economy, calling for a clear roadmap to ease travel restrictions ahead of the crucial summer season.

In a webinar organised by lobby group Airlines UK, heads of carriers including EasyJet and Virgin Atlantic stressed the importance of the sector to the UK economy and employment. 

Without measures to reopen, the industry would need a support package to survive and protect jobs, EasyJet chief executive Johan Lundgren said.

Ryanair, one of the market leaders in the UK, declined to comment.

Overseas trips are effectively banned for most British people under lockdown rules, while incoming travelers are forced to take multiple Covid-19 tests and, in many cases, mandatory hotel quarantines.

Mr Johnson is under pressure to help the UK economy rebound from its worst recession in 300 years. He is due to set out a plan for easing the rules next Monday, and has said he will look closely at the data regarding infections, hospitalisations and deaths before making any decisions.

The usually lucrative summer season is when European airlines tend to make most of their revenue. Without a reopening in time for summer, carriers would have faced the equivalent of four consecutive winters since the pandemic began, said Jonathan Hinkles, the CEO of Scottish regional carrier Loganair.

The head of planemaker Airbus said that government decisions on whether to reopen borders or continue with restrictions will have an impact on the aviation industry’s comeback.

“The pace of recovery will not only depend on the evolution of the pandemic and rate and effectiveness of vaccines, but also the reaction of governments,” CEO Guillaume Faury said.

Airbus generated €4.9bn in cash during the fourth quarter, while issuing cautious guidance on the pace of its recovery from aviation’s worst-ever crisis. The company’s downbeat outlook for low levels of deliveries this year surprised analysts who had expected Airbus to target higher aircraft deliveries after successfully balancing demand with output in the final months of 2020. The assessment reflects uncertainty over when the “tipping point” for a travel rebound will come, Mr Faury said.

Meanwhile, Air France-KLM has said it is poised to get a fresh government bailout after burning through €2.1bn in the final quarter of last year. Talks are ongoing between the carrier’s biggest shareholders, the French and Dutch governments, and the EU about a rescue package. Air France-KLM said it had €9.8bn of liquidity and credit lines at its disposal at the end of 2020 compared with €12.4bn three months earlier.

The airline group posted a net loss of €7.1bn for 2020 and said it expects losses to worsen and the Covid-19 crisis to wipe as much as €200m from its earnings.

Reuters and Bloomberg

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