While airlines around the world are approaching governments for aid, British Airways has taken a different approach.
In the United Kingdom, Flybe went out of business early after the COVID-19 outbreak due to depressed demand. Virgin Atlantic has now approached the government looking for “clear, decisive and unwavering support” including direct aid of up to £7.5 billion and a further waiver of the Heathrow slot restrictions. A spokesperson said:
“With this support, airlines including Virgin Atlantic can weather this storm and emerge in a position to assist the nation’s economic recovery and provide the passenger and cargo connectivity that business and people across the country rely on.”
But British Airways has not asked for government aid. And, at least for now, this has not just been silence, but a deliberate choice. Willie Walsh, CEO of IAG, the Anglo-Spanish multinational airline holding company that includes Aer Lingus, British Airways, Iberia and Vueling, explained the approach:
“I think individual airlines have been approaching governments looking for state aid, we have not done so.”
“Governments would expect airlines to look at self help before they would call on governments to provide state aid.
“Clearly where governments are providing general support – particularly for employees impacted by the current crisis – we would avail of those general facilities for the benefit of our employees.
“But we have not had any dialogue with governments in relation to state aid.”
IAG did ask that the slot usage requirements be loosened at London Heathrow and that request was granted quickly.
CONCLUSION
British Airways is taking a much more realistic approach than Virgin’s demand for cash or the request for $25BN in cash across the Atlantic from U.S. carriers. I tend to think, sadly, that the situation will get worse before it gets better. Consequently, aid may still be awarded at a later time. But even now airlines should exhaust other options and declare bankruptcy before seeking state aid in the form direct cash payments.
Huh? So what’s the answer for why they haven’t seek government aid yet? Sorry, this self isolation situation is driving me nuts
You’ve missed the point Matthew. BA rejected the idea of state idea for Flybe because it would get back 12 pairs of Heathrow landing slots, worth $100m+, if Flybe went bust. Job done, slots returned.
Similarly, Virgin Atlantic will go bust long before BA. It makes perfect sense to force Virgin Atlantic into bankruptcy and THEN go asking for money, on the grounds that it is the only national carrier left.
Well, if that’s the case then I did miss that. Good analysis, if true.
You also missed the fact BA has €9 billion cash reserves, meaning they can wait until Virgin and others go to the wall before asking for aid.
I think that’s the nail on the head….might be a pity for Virgin that Walsh is hang ing around a while. He’s a crafty bugger.
This is a very unscrupulous move by the airlines to put a noose around the travelling public’s neck and squeeze. Not everyone is in agreement with the state of affairs. This situation might suit a few; and displeased the masses. I’d have preferred to get my cash back than to be offered a voucher .
Fellow Americans,
We are in this together. I suggest we immediately use government money to bail me out and after this crisis has passed we will use government money to kick you out into the street. See how that works? We both get to use government money. In the meantime I will get some economists and pretty dumb blondes to get on FOX to tell you why this is as American as your immigrant mom. Wait, I hope they don’t screw that up.
Alright stay away at least 6 feet from me you stinky bastard.
– guess who?
One of the obvious reasons why they do not need to ask for state aid is that unlike other British airlines such as Virgin Atlantic, they are refusing to refund passengers and agents for cancelled flights. Instead, they expect everyone to take a voucher for the value of the flight and then rebook at whatever fares are available in the future. It may be good business sense but they are losing a lot of goodwill as a result.
Wonder what will happen to your miles as an unsecured liability in bankruptcy?