Doha
The International Air Transport Association (IATA) released analysis showing that the airline industry’s global debt could rise to $550bn by the year-end.
That’s a $120bn increase over debt levels at the start of 2020. $67bn of the new debt is composed of government loans ($50bn), deferred taxes ($5bn) and loan guarantees ($12bn).
$52bn is from commercial sources including commercial loans ($23bn), capital market debt ($18bn), debt from new operating leases ($5bn), and accessing existing credit facilities ($6bn).
Financial aid is a lifeline to get through the worst of the crisis without folding operations. But during the re-start period later this year, the industry’s debt load will be near $550bn—a massive 28% increase.
“Government aid is helping to keep the industry afloat. The next challenge will be preventing airlines from sinking under the burden of debt that the aid is creating,” said Alexandre de Juniac, IATA’s director general and CEO.
In total governments have committed to $123bn in financial aid to airlines. Of this, $67bn will need to be repaid. The $123bn in government financial aid is equal to 14% of 2019’s total airline revenues ($838bn). The balance largely consists of wage subsidies ($34.8bn), equity financing ($11.5bn), and tax relief / subsidies ($9.7bn).—Gulf Times