May 26, 2020 | 4:17 pm
Government aid to airlines hit by the coronavirus crisis reached $ 123 billion in mid-May, according to the International Air Transport Association (IATA).
Contrary to what happened in other countries, support measures for the industry have not yet been announced in Mexico, despite the fact that the Association confided in late April that the government would rule on it after a series of talks.
Of the total amount recorded by IATA, $ 50.4 billion was granted in the form of loans; 34,800 million, in employment support; 11,500 million, in guaranteed loans, and 11,200 million by capital injection, the organization reported on Tuesday.
Of the $ 123 billion, $ 67 billion will have to be repaid and the total amount of the sector’s debt will rise to “about $ 550 billion, or an increase of 28%,” according to IATA estimates, which groups 290 airlines
The next challenge will be to prevent companies from drowning under the weight of aid-created debt,
commented IATA Director General Alexander de Juniac.
These grants were distributed “fairly unevenly” around the world, the association’s chief financial officer, Brian Pearce, explained in a conference call.
The US government led the way with its ‘Cares Act’ – a stimulus package to deal with the coronavirus – (and an aid that) in total represents a quarter of the annual income of companies in this region of the world,
Europe comes second, with supports representing 15% of annual turnover, and Asia with 10%.
In contrast, in Africa, the Middle East or Latin America, such aid only represents around 1% of companies’ annual turnover in 2019.
“In cases where governments did not respond quickly enough (or did so) with limited amounts, bankruptcies occurred,” said Juaniac.
These countries include Australia, Italy, Thailand, Turkey and the United Kingdom.
The organization does not have precise figures on the number of bankrupt companies, according to Pearce.
If the situation does not improve at the time of the restart (scheduled for June), we fear attending a series of bankruptcies,
Furthermore, traffic could return to its pre-crisis level in 2023, according to IATA.
Contrasts between airlines
In this context, LATAM Airlines, the largest company in Latin America, filed for bankruptcy in the United States on Tuesday, causing its share price to drop as much as 50% to 1,100 Chilean pesos.
While the German company Lufthansa agreed with the government of that country a rescue plan for 9.8 billion dollars, a fact that the Irish low-cost airline Ryanar contested.
With information from .