Australian airlines will need government assistance
By Geoffrey Thomas Sat Apr 4, 2020
In the next 12 months both Australia's major airlines will need government support to survive COVID-19 says Virgin Australia boss Paul Scurrah.
Speaking with WestBusiness Mr Scurrah said the airline wasn’t seeking a $1.4 billion bailout as such but a bridging facility and may not even be called on.
“The airline industry needs a statement of confidence - a backstop.”
“We want to work with the government on how best to design this but it will be a repayable loan.
READ: Airfares to jump 20 per cent if Australia ends up with a monopoly.
“This gives us and our people certainty to ensure we can fire back up quickly when the economy recovers.
BELOW: AirlineRatings.com Editor-in-Chief Geoffrey Thomas discusses what the Australian Government should be doing for its airlines.
https://www.youtube.com/watch?v=zItrIPx_5Xg
“It puts thousands of people back in jobs and millions of Australians back in the air.
“We are getting barely 10 per cent of our normal revenue but have fleet payments and other payments to make,” Mr Scurrah said.
“Every major airline in the G20 is being helped by their governments to get through the unprecedented impacts of the COVID19 as the situation is time-critical.”
“Normal sources of loans are not lending to airlines.”
“The situation is time critical that is why we need that statement of confidence.”
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And the International Air Transport Association (IATA) backs up Mr Scurrah’s call for support pleading with governments to support their airlines.
IATA forecasts for Australia that passenger numbers will be down by 35 million, revenue for our airlines will sink by $18 billion and the impact on the country's GDP will be $44 billion.
Job losses related to the impact on Australia’s airlines and related industries such as tourism is put at 278,000.
If the government refuses to help with a bridging loan Mr Scurrah said the airline will look at every way to conserve its reserves of cash to get through.
“All Australian airlines will be battered and bruised from the impacts of the travel restrictions.”
And Mr Scurrah warned that Australia not only faces a domestic monopoly in the worst-case situation but a US monopoly.
He said that under the US support for its airlines marginal routes are not supported and that would take US carriers off the Australia routes for some time.
“There is a possibility of Qantas having a monopoly on US routes as well.”
Mr Scurrah said that “the prospect of new airlines entering to take the place of Virgin is not likely.”
"Airlines around the world are in distress and won’t have the cash to invest in a start-up operation in Australia,” he said.
“No business under this kind of pressure and with this level of uncertainty can survive indefinitely.”
“All airlines will require government assistance to support a recovery and we are no different.
“IATA has estimated global revenue losses of $US252 billion which shows the extent of the challenge. This is why you’ve already seen governments around the world deliver loans or relief packages to their airlines.”
And the International Air Transport Association (IATA) backs up Mr Scurrah’s call for support pleading with governments to support their airlines.
IATA forecasts for Australia that passenger numbers will be down by 35 million, revenue for our airlines will sink by $18 billion and the impact on the country's GDP will be $44 billion.
Job losses related to the impact on Australia’s airlines and related industries such as tourism is put at 278,000.
If the government refuses to help with a bridging loan Mr Scurrah said the airline will look at every way to conserve its reserves of cash to get through.
“All Australian airlines will be battered and bruised from the impacts of the travel restrictions.”
And Mr Scurrah warned that Australia not only faces a domestic monopoly in the worst-case situation but a US monopoly.
He said that under the US support for its airlines marginal routes are not supported and that would take US carriers off the Australia routes for some time.
“There is a possibility of Qantas having a monopoly on US routes as well.”
Mr Scurrah said that “the prospect of new airlines entering to take the place of Virgin is not likely.”
"Airlines around the world are in distress and won’t have the cash to invest in a start-up operation in Australia,” he said.
“No business under this kind of pressure and with this level of uncertainty can survive indefinitely.”
“All airlines will require government assistance to support a recovery and we are no different.
“IATA has estimated global revenue losses of $US252 billion which shows the extent of the challenge. This is why you’ve already seen governments around the world deliver loans or relief packages to their airlines.”Have questions or want to share your thoughts?
