Airlines raise over $17 billion to stay afloat

Airlines worldwide raised more than $17 billion in bank loans in March to shore up their finances amid the coronavirus outbreak.

U.S. carriers were the most active, borrowing $12.5 billion, according to data compiled by Bloomberg. Delta Air Lines Inc. is the top borrower this month, obtaining $5.6 billion, followed by Singapore Airlines Ltd., which secured a S$4 billion ($2.8 billion) bridge loan, and United Airlines Holdings Inc., which raised $2.5 billion.

The airlines have borrowed new loans or drawn down on existing credit lines that they typically didn’t use before the health crisis. Companies in all industries globally have raised more than $230 billion from commercial banks since early March in response to the virus.

Eleven other airlines, including British Airways Plc and Etihad Airways PJSC, have about $8 billion in combined revolving facilities that they may not yet have drawn, the data show.

EasyJet Plc said Monday it’s in “ongoing discussions with liquidity providers” as it grounded its entire fleet. The U.K. discount carrier has a $500 million revolver.

The aviation industry is asking individual governments for state aid, including carriers based in Germany, Thailand, and the U.S. Worst-hit by the coronavirus disease pandemic, global airlines were estimated to burn through $61 billion of their cash reserves during the second quarter ending 30 June 2020.

In this scenario, full-year demand falls by 38 per cent and full-year passenger revenues drop by $252 billion compared to 2019. The fall in demand would be the deepest in the second quarter, with a 71 per cent drop. 

The impact will be severe, driven by the following factors like revenue, variable costs, fixed and semi-fixed costs. Several governments are responding positively to the industry’s need for relief measures. Among countries providing specific financial or regulatory aid packages to the industry are Colombia, the United States, Singapore, Australia, China, New Zealand and Norway.

Most recently, Brazil, Canada, Colombia, and the Netherlands have relaxed regulations to allow airlines to offer passengers travel vouchers in place of refunds.