The Corona-virus pandemic is reshaping the future of airlines in Europe. A prolonged travel ban is adding deep industry-wide uncertainty for the upcoming months as millions of passengers are demanding refunds for cancelled flights.
Several countries across the EU have pledged massive bailouts for their aviation industry to prevent catastrophic repercussions from the grounding of airline fleets and millions in lost revenue.
Aerospace manufacturing giant Airbus, one of Europe’s flagship companies, has announced it will slash production by a third, with its chief executive, Guillaume Faury, saying that the company is “bleeding cash”.
While the European Commission is set to present a strategy in mid-May to get planes back in the sky, it remains unclear when travel operations will resume. Brussels has indicated that have it is unlikely that the tourism sector will reopen for non-EU foreigners before July 1.
For Europe’s tourism-dependent south, however, where the sector accounts for 15%-30% of the GDP’s of Italy, Greece, and Spain, the virus outbreak risks causing irreparable damage to their economies.
But with companies like Lufthansa, KLM, and Air France losing millions of euros each day and with air traffic in Europe down by more than 80%, questions remain about the long-term health of the airline industry in the European Union.
France and the Netherlands will provide an unprecedented taxpayer-funded bailout of 10 billion euros, about $10.8 billion, to salvage Air France-KLM as the fallout of the coronavirus on the travel industry exacts a devastating toll on global air carriers.
Air France-KLM, one of Europe’s biggest airlines, will receive a €4 billion bank loan backed by the French state and a €3 billion direct government loan, Bruno Le Maire, France’s finance minister, said late Friday. The Dutch government said it would provide an additional €2 billion to €4 billion in public aid.
The aid infusion falls short of nationalizing the company, in which the French and Dutch states each own a 14% share. The European Commission — the executive branch of the European Union, which has thrown out restrictions on state support amid a deep economic downturn — swiftly approved the bailout.
It is the third multibillion-euro lifeline extended this past week by the French government to companies battered by the Corona-virus.
Since the crisis hit, the French government has backed more than €20 billion in loans for 150,000 companies, part of a huge fiscal package to support the economy and limit mass joblessness until businesses can safely start operating again.
New Europe / ABC Flash Point News 2020.