'Time is running out': airline industry warns government

Airlines and airports have warned that time is running out for the government to enact promised measures to help the aviation industry, with EasyJet and Ryanair set to stop flying after Monday and less than 5% of normal passenger numbers expected at major airports.

Further talks are expected between ministers and the industry on Monday as the government wrestles with how to keep critical infrastructure functioning.

Although work is understood to have continued over the weekend, there is frustration in the industry at the time elapsed without any concrete detail, even after the chancellor, Rishi Sunak, made a second major intervention in three days on Friday evening.

Karen Dee, chief executive of the Airport Operators Association, said measures to support employers through the pandemic were welcome, but the industry had been holding off taking drastic steps pending promised special state support.

She said: “While government has been receptive, it has not led to clear next steps and airports will now face making extremely difficult decisions.”

The process of laying off hundreds of staff has now started at airports, including Edinburgh. An industry source said that confirmed assistance, such as deferral of some charges, were “peanuts rather than the big bazooka”.

The pilots union Balpa warned that more airline staff would also be made redundant before special measures could be implemented, and accused the government of “still sitting on its hands while airlines are shutting down”.

General secretary Brian Strutton said: “Airlines can’t survive with no revenue coming in and are already cutting wages and jobs. State investment in UK airlines, as other countries are doing, is essential as a matter of urgency before it’s too late.”

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It is understood measures being considered by the Treasury include the government taking a direct stake in carriers, but discussions, which have been ongoing since last Tuesday, are not expected to reach a conclusion until at least the middle of this week.

While airports have presented a united front in calls for assistance, government intervention in airlines is more complicated. Although British Airways has warned its staff that its survival is at risk, its owner IAG has distanced itself from calls for state assistance led last week by its smaller rival, Sir Richard Branson’s Virgin Atlantic. IAG’s chief executive Willie Walsh has long argued that the European industry needs to consolidate, even in far rosier economic times.

Potential government aid announced in January to help Flybe, before the coronavirus outbreak pushed the partly Virgin-owned regional airline into bankruptcy, was swiftly challenged by IAG and Ryanair.

EasyJet, which was until now the biggest carrier by passenger numbers in the UK, said: “We fully support and welcome the government’s commitment to support airlines during these unprecedented times. Our focus is on measures to help with short term liquidity and protect jobs, but we can’t comment on the finances of other airlines or what action they might require.”

Although EasyJet has insisted it only seeks a loan on commercial terms, the airline is going ahead with a dividend payout which will hand around £60m to its largest shareholder, Stelios Haji-Ioannaou, alone. The airline said it was legally obliged to make the payout.

The Department for Transport said: “A number of measures to support the aviation sector have already been announced, including Time to Pay, financial support for employees and the Bank of England’s Covid corporate financing facility . The government is working urgently to develop further measures, as necessary.”

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The chancellor’s emergency package of support announced on Friday evening, which contained the extraordinary pledge to pay up to 80% of workers’ salary during the crisis, has also yet to address if and how Britain’s 5.2 million self-employed will be supported.

The British Chambers of Commerce (BCC) said sole traders had felt little reassurance from the measures that helped larger firms. BCC director general Dr Adam Marshall said: “While we understand the complexity involved, there are 5 million self-employed people who need help similar in scale and scope to that put in place for larger firms in recent days.”

Unions also urged the government to ensure its wage support scheme did not omit around 1 million building workers considered to be trapped in “bogus self-employment”.

Unite said the workers are taxed at source and then claim expenses as self-employed workers, under construction industry payroll schemes that largely benefit the actual employers.



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