These airlines have received a bailout

Airlines have never experienced a period of crisis like this one. Some asked for help immediately, some have maintained they do not need any aid, while others are waiting to see what will develop.

Here we look at the current situation.  We will update this as things change.

Air France-KLM received €10bn in state aid from both the French and Dutch government, with €7bn from the French and between €2bn and €4bn from the Dutch.

As with other U.S airlines (Alaska Airlines, Allegiant Air, American Airlines, Delta Air Lines, Frontier Airlines, Hawaiian Airlines, JetBlue Airways, United Airlines, SkyWest Airlines and Southwest Airlines), American Airlines has accessed funding as part of the U.S the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

It will receive $5.8 billion from the Payroll Support Program (PSP) to support staff salaries and benefits, which comes in two forms: a direct grant of $4.1 billion, and a low-interest rate loan of $1.7 billion. In addition to the $5.8 billion, American expects to separately apply for a loan from the U.S. Treasury of approximately $4.75 billion.

For an analysis of the bailouts, see our interview with aviation consultant, John Strickland, below.

British Airways, through parent company IAG, has secured £300 million from the UK government. IAG has separately secured financing from the Spanish government for Iberia (see below).

As with other U.S airlines (Alaska Airlines, Allegiant Air, American Airlines, Delta Air Lines, Frontier Airlines, Hawaiian Airlines, JetBlue Airways, United Airlines, SkyWest Airlines and Southwest Airlines), Delta Airlines has accessed funding as part of the U.S the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

It will receive$5.4 billion from the Payroll Support Program (PSP) to support staff salaries and benefits, which comes in two forms: a direct grant of $4.1 billion, and a low-interest rate loan of $1.6 billion.  The Atlanta-based airline will also provide the government with warrants to acquire about 1% of Delta stock at $24.39 per share over five years.

In the UK, the Luton-based Easyjet has accessed the UK’s emergency coronavirus fund Covid-19 corporate financing facility, which allows UK businesses to apply for loans at pre-crisis commercial rates.

Easyjet secures £600 million government coronavirus loan

Iberia (and Vueling) have accessed (through owner IAG) state-backed loans of over $1 billion according to Bloomberg. Iberia plans to borrow 750 million euros and Vueling 260 million euros.

Lufthansa Group says it is in negotiations with the governments of its home countries regarding various financing instruments to sustainably secure the Group’s solvency in the near future.

Bloomberg reports that in Germany alone this could amount to $10 billion in aid in the form of loans, credit guarantees and a possible equity stake by the German government. This could make the German government the largest shareholder in the Group.

The Lufthansa Group comprises member carriers Austrian Airlines, Brussels Airlines, Lufthansa and Swiss, as well as subsidiaries including Eurowings and Edelweiss Air.

Norwegian has secured a loan guarantee from the Norwegian state of NOK 3 billion and converted NOK 12.7 billion of debt to equity.

The airline is forecasting that the majority of its fleet will remain grounded until April 2021 apart from some short haul flying around Scandanavia.

Ryanair’s CEO, Michael O’Leary, was outspoken about airline’s receiving bailouts and has threatened to sue if Ryanair’s competitors receive state aid.

Ryanair has, however, raised £600 million under the UK’s Covid Corporate Financing Facility (CCFF).

As with other U.S airlines (Alaska Airlines, Allegiant Air, American Airlines, Delta Air Lines, Frontier Airlines, Hawaiian Airlines, JetBlue Airways, United Airlines and SkyWest Airlines), Southwest Airlines has accessed funding as part of the U.S the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

Southwest Airlines has said that it will receive more than $3.2 billion, consisting of more than $2.3 billion in direct payroll support and a nearly $1 billion unsecured ten-year term loan (“loan”) with low interest rates and which may be repaid at any time prior to maturity at par.

The airline said that “the loan is expected to include approximately 2.6 million warrants issued to the US Department of Treasury. The programme includes certain conditions, such as: prohibitions against involuntary furloughs and reductions in employee pay rates and benefits through September 30, 2020; the elimination of share repurchases and dividends until September 30, 2021; and limits on executive compensation until March 24, 2022.”

As with other U.S airlines (Alaska Airlines, Allegiant Air, American Airlines, Delta Air Lines, Frontier Airlines, Hawaiian Airlines, JetBlue Airways, United Airlines, SkyWest Airlines and Southwest Airlines), United Airlines has accessed funding as part of the U.S the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

It will receive $5.0 billion total the airline expects to receive, approximately $3.5 billion will be a direct grant and approximately $1.5 billion will be a low interest rate loan. These funds secured from the U.S. Treasury Department will be used to pay for the salaries and benefits of tens of thousands of United Airlines employees. In connection with the Payroll Support Program, the airline’s parent company also expects to issue warrants to purchase approximately 4.6 million shares of UAL common stock to the federal government.

Virgin Atlantic has asked for £500 million from the UK Government’s Covid Corporate Finance Facility, a loan scheme operated by the Bank of England. To access the facility, Virgin Atlantic has to prove it deserves the investment and is unable to access the money from its shareholders.

You can read more in this Financial Times piece

How Richard Branson changed his mind over government aid

Vueling and Iberia have accessed (through owner IAG) state-backed loans of over $1 billion according to Bloomberg. Vueling plans to borrow 260 million euros and Iberia plans to borrow 750 million euros.