Europe: 25 billion euros for airlines

Help might not be enough.

European airlines have so far received 25 billion euros in state aid to deal with the Corona crisis this year – but that will not be enough. This is the result of a study by the German analysis specialist Scope Ratings. “The liquidity buffers that most airlines had at their disposal were not sufficient to cope with a crisis of the magnitude that was triggered by the pandemic and led to the grounding of almost all aircraft in April and May,” says Scope analyst Werner Stäblein.

The financial situation has stabilized for the time being, “but the future debt reduction and necessary operational restructuring will prove to be challenging for some players in the industry,” added Stäblein. Last week, voices had already been heard from Lufthansa that the nine billion euros in government aid might not be enough.

Because especially premium airlines are not real cash cows even in good times: The big three airline groups in Europe (Lufthansa, Air France / KLM and IAG) recently had an annual turnover of around 90 billion euros – but only 2.5 billion euros Inflow of capital from ongoing business. According to Stäblein, this is due to low margins and high investments in the industry. And in times of crisis, most airlines have negative cash flows.

Refunds are a burden for airlines
“Of course, a large part of the cash requirement in 2020 will depend on the amount of ticket reimbursements, the continuation of short-term contracts and an increase in demand for air travel.” The three major European network operators have announced that investments will be cut by more than four billion euros over the next few years .

In addition, there is currently not so much of the hoped-for recovery in air traffic. “Customers for long and short-haul transport continue to book at very short notice. Business trips are only recovering slowly, ”says Stäblein. It is true that with the gradual increase in passenger traffic, the cargo capacity in passenger aircraft is also increasing. But the cargo division is too small to make up for lost revenue from passenger travel. “A restoration of air traffic to pre-Covid-19 levels is unlikely before 2024,” says Stäblein. “The industry must reduce its capacity accordingly.”


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