Covid-19 and carriers: global default risk
From Russia to the USA, passing through Europe
The global air transport system risks an unprecedented crisis. The president of Copasir (Parliamentary Committee for the Security of the Italian Republic, Editor's note), asks Conte to intervene in defense of the country's strategic assets. By now the medical bulletins on the trend of the pandemic alternate with the news of the financial problems that many air transport companies see looming on the horizon, with the anything but remote perspective, that many end up in default, or are unable to support financial commitments and are declared bankrupt.
Fear in the aviation sector knows no bounds. In a conference held in Moscow, Rosaviatsia, Federal Office for Air Transport, Alexander Neradko, said that "some airlines are on the verge of bankruptcy" (see AVIONEWS). For the only missing connections with China, Russian companies would have lost more than 1.7 billion rubles (22.6 million dollars). A figure that could reach over 100 billion rubles. Aeroflot itself, the flag carrier of the Russian Federation, appears cornered if it is forced to ask employees to take periods of forced leave.
It is no better in the United States where air companies have estimated the financial assistance they need at over 50 billion dollars. A figure that exceeds three times the interventions put in place by the stars and stripes government after 9/11. And, as AVIONEWS wrote yesterday the transport sector is not made up solely of passenger transport companies. Companies managing American airports have asked for USD 10 billions in financial aid to make up for 2020 losses. The Trump government is evaluating terms and extent of interventions that should respond to the understanding of the number one in the White House, which said it wanting to "support airlines 100%".
Support requests also come from Boeing already proven by the 737MAX events. The Seattle giant asked in a letter to the US government for help, recalling that over 600 suppliers all from the United States are contributing to its production chain. An elegant way to say that its default would have catastrophic results on the entire American aerospace industry composed of over 17,000 suppliers that employ 2.5 million workers.
IATA, the International Air Transport Association that brings together the world's largest carriers, has released estimates that make losses to the industry amount to USD 113 billions, but many experts believe that the final figure will be greater. The size of the problem is such that Copasir is also concerned, which by its president Raffaele Volpi, praises the French Economy Minister for having suggested the nationalization of strategic assets, such as airlines, to prevent them from falling into the hands of foreign groups. "The financial and legislative instruments that allow the imperative defense of the country's strategic interests must be identified, evaluating options that may include capitalization intervention, equity investments, up to reaching direct control capacity". Exactly what the Government has started implementing yesterday with Alitalia.
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