Yahoo Finance Airlines to get $715m bailout package
Australia's suffering airlines will be given a $715 million bailout package from the federal government to help the sector amid the coronavirus outbreak, which has already seen Qantas ground 90 per cent of its international fleet.
The government announced last night it would forgo fuel excises for the airlines, as well as air service charges and regional security fees.
Deputy Prime Minister Michael McCormack said the government would backdate refunds to February 1, with the move expected to create an upfront benefit of $159 million.
"Our airlines run on tight budgets at the best of times and these past few weeks have been particularly tough," McCormack on Wednesday.
"I've been speaking with Australian airline executives every day and will continue to work with them to make sure they receive the support they need."
Also read: Qantas grounds 90% of international fleet
Also read: Qantas chief rejects his own salary as coronavirus cripples airline
Also read: The day we see if Australia will suffer worse than a recession
Airlines could be bankrupt by May
It comes days after the Centre for Aviation (CAPA) flagged most world airlines could be bankrupt by the end of May.
“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,” the CAPA stated.
“Cash reserves are running down quickly as fleets are grounded and what flights there are operate much less than half full.
“Forward bookings are far outweighed by cancellations and each time there is a new government recommendation it is to discourage flying.
The package also comes one day after Qantas announced it would slash its international capacity by 90 per cent and domestic flights by 60 per cent at least until the end of May.
The national carrier also flagged a labour surplus as a result of the “precipitous decline” in demand.
The company said it was working to manage the impact on its 30,000 workforce as much as possible, including through the use of paid and unpaid leave.
Rex flags ‘weeks left’
Regional carrier Rex has urged government action, after it revealed it had “only weeks of reserves left”.
In an open letter to McCormack, Rex chief operating officer Neville Howell wrote: "Rex does not believe that Rex, and all other regional carriers, will be able to pull through this crisis without significant assistance if the health authorities' projections prove accurate.”
– With AAP
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