A trade body that represents UK-based airlines wants a special government-funded job retention scheme to be extended beyond the end of June. Airlines UK has called on Chancellor Rishi Sunak asking for the furlough scheme to be extended for aviation workers over fears the airline industry will take much longer to recover from the COVID-19 crisis than other sections of the economy.
Airlines UK chief executive Tim Alderslade warned the Chancellor that without an extension, the aviation industry faced falling off a “cliff-edge post-June, whilst services are scaled-up.”
In late March, Sunak announced unprecedented measures to pay workers in jobs that aren’t currently viable because of the Coronavirus pandemic. Eligible workers are paid 80 per cent of their normal wages up to £2,500 to encourage employers not to lay-off workers.
The scheme was originally meant to run for April and May but has since been extended to the end of June.
The International Air Transport Association (IATA) recently released new research that estimates UK-based airlines could lose $26.1 billion in revenue in 2020 because of the crisis. 140 million fewer passengers will be flown by British airlines and up to 661,200 jobs could be lost.
Underscoring the importance of the aviation industry to the UK economy, IATA estimates the UK economy will lose $50.3 billion in contributions which are generated by airline businesses.
“We anticipate that once restrictions are eased, the return to normality for international aviation will be gradual rather than sudden,” Tim Alderslade, chief executive of Airlines UK wrote in the letter to the Chancellor.
“There is a danger that should the CJRS (Coronavirus job retention scheme) be withdrawn prematurely, carriers experiencing only a tentative revenue recovery will face a renewed cash crisis.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,” Alderslade warns.
Virgin Atlantic remains in talks with the British government over a proposed £500 million bailout, while there is speculation that Sir Richard Branson is considering selling off his 51 per cent stake in the airline to raise much-needed equity to keep the carrier afloat.
Low-cost airline easyJet has already been awarded a £600 million loan from the government but the owner of British Airways has so far resisted asking for financial assistance apart from the job retention scheme.
The airline industry could face further pressure as government officials consider mandating a 14-day quarantine for all new arrivals. The United Kingdom has been an international outlier by not imposing any travel restrictions throughout the Coronavirus pandemic.
