The UK’s airlines have written to chancellor Rishi Sunak warning him that carriers could face a “renewed cash crisis” if the coronavirus job retention scheme is not extended beyond June.
In a letter, Tim Alderslade, chief executive of sector body Airlines UK, said: “There is a danger that should the CJRS be withdrawn prematurely, carriers experiencing only a tentative revenue recovery will face a renewed cash crisis.
“We believe that the scheme will need to be extended beyond June, and that consideration should be given to measures to avoid aviation facing a cliff-edge post- June, whilst services are scaled-up”.
Many airlines, which have been among the businesses worst hit by the coronavirus pandemic, have made use of the Treasury scheme to save costs amid a historic collapse in demand.
Under the initiative, the government has agreed to pay 80 per cent of the wages of company employees until the end of June.
Across the economy some 4m people are currently reported to be on the scheme.
Alderslade added that even when restrictions are lifted, he expected the return to normality for international aviation to be “gradual rather than sudden”:
“Research by IATA has shown that a substantial number of travelers are likely to delay a return to travel, and a majority could wait until they have greater certainty around their own personal finances”.
With air traffic down across Europe some 90 per cent, many airlines are at risk of going out of business.
German state carrier Lufthansa last week warned that its future was dependent on receiving financial assistance from authorities.
In the UK, airlines have begun to access the Bank of England’s Covid Corporate Finance Facility, with Easyjet securing a £600m loan.
Sunak had said that carriers would only be in line for a bailout as a “last resort” once all other cash raising options had been exhausted.
Sir Richard Branson called last week for a bailout for Virgin Atlantic, a move that has proved deeply controversial.
In a letter to the Times this morning, the Church of England said that companies registered in offshore tax havens should not be in line for government bailouts.
Negotiations between Virgin and the government continue, with reports that Branson is racing to find a new investors for the carrier.