‘Diminishing cash flow, rising debt’ - Changing picture of airline finances:
27 May 2020: It’s true that financial aid is a lifeline to get through the worst of the crisis without folding operations and Government aid is helping to keep the industry afloat. However the next big challenge is to prevent the airlines from sinking under the burden of debt that the aid is creating said Alexandre de Juniac, IATA’s Director General and CEO.
Government has so far given USD 123 billion to airlines in financial aid of which USD 67 billion need to be repaid. The balance amount of USD 60 billion is vital for airlines for use in the second quarter of 2020.
“Over half the relief provided by governments creates new liabilities. Less than 10 per cent will add to airline equity. It changes the financial picture of the industry completely. Paying off the debt owed governments and private lenders will mean that the crisis will last a lot longer than the time it takes for passenger demand to recover,” said de Juniac.
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