A bailout of up to $3 billion is being touted for Air New Zealand as airlines across the world face annihilation due to travel bans.
The national carrier was excluded from the government’s $12 billion stimulus package announced this week, but an announcement is reportedly imminent which will outline significant funds to support it through the coronavirus crisis.
“By the end of May 2020, most airlines in the world will be bankrupt,” the Centre for Aviation (CAPA) warned this week. “Coordinated government and industry action is needed – now – if catastrophe is to be avoided.”
Air New Zealand announced on Monday it will reduce its 12,500-strong workforce by up to 30 percent, representing some 3750 jobs, and is encouraging staff to take annual leave, long service leave and leave without pay.
It has cut numerous international routes including 80 percent of flights across the Tasman, With CEO Gred Foran saying: “One of the harsh realities we find ourselves facing is that we will require fewer Air New Zealanders as we move to grounding most of our international operations”.
The Australian government has meanwhile committed $715 million to fund measures supporting its carriers, include waiving fees and charges such as those paid annually to regulator Airservices Australia.
Qantas and its budget arm Jetstar have cancelled all international flights and temporarily stood down 20,000 employees an in attempt, the company says, to “preserve as may jobs as possible longer term”. Some 60 percent of the airlines’ domestic flights have also been suspended.
Virgin Australia has suspended all international flights from March 30 to June 14, and major operators around the world, including British Airways, Virgin Atlantic and American Airlines, have all announced a dramatic scaling back of services.
CAPA says governments globally will need to commit billions of dollars to bailouts if the loss of hundreds of thousands of jobs is to be avoided.
“As the impact of the coronavirus and multiple government travel reactions sweep through our world, many airlines have probably already been driven into technical bankruptcy, or are at least substantially in breach of debt covenants,” it stated.