Tuesday 28 April 2020 2:40 pm

Coronavirus: European airlines continue to tap governments for aid

European airlines continued to tap their respective governments for state aid in order to survive the coronavirus crisis, which has shut down air travel across the world.

German state carrier Lufthansa is still in negotiations with federal authorities over a €9bn loan deal, despite overnight reports that an agreement had been reached.

Read more: Airlines call on government to extend furlough scheme beyond June

Shares swiftly climbed 12 per cent on the reports this morning, before falling back over the course of the day.

The talks come after Lufthansa booked a first quarter loss of €1.2bn, raising fears that the carrier could be forced out of business.

The firm, which has grounded all of its planes, is burning through cash at a rate of €1m an hour, chief executive Carsten Spohr said earlier this month.

Meanwhile, Spanish media reported that its government was in talks with Iberia, part of London-listed International Airlines Group, over a potential loan.

According to the reports, the Spanish authorities are not considering taking a stake in the carrier at this stage. 

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Like other Spanish companies, Iberia is able to draw from a special credit line set up for firm’s facing liquidity challenges. 

Scandinavian Airlines also announced further measures to preserve costs, saying it could cut up to 5,000 full-time jobs through the summer season with much of its fleet grounded.

Last month the carrier had said it would lay off 90 per cent of its staff temporarily due to the collapse in demand caused by coronavirus.

Chief executive Rickard Gustofson said that the airline was targeting a return to normal service levels in 2022. 

The number of flights has plummeted to record lows in recent months due to stringent travel bans and border closures.

Read more: Norwegian Air says planes set to remain grounded until April 2021

Today, Argentinian authorities announced a ban on all commercial flights until September, one of the harshest restrictions currently in place.

Industry bodies reacted with horror, saying that the measures would threaten thousands of jobs.