Europe goes to the rescue of the main Airlines 

European governments are beginning to mobilize their machinery to provide financial support to the major airlines. The Spanish government is studying how to provide public funds to Iberia to alleviate its situation due to the flight stoppage as a result of the COVID-19 pandemic. The authorities were waiting for instructions from Brussels to provide public aid to strategic companies, which until now have been very limited due to their distortion of free competition. But in view of the fact that other countries have already come to the rescue of their emblematic companies, such as France and Germany, Spain has also decided to act.  

Airlines have been one of the sectors most affected by the coronavirus outbreak. Flights are paralyzed and there is no official timetable for the resumption of activity. In this scenario, Spain is one of the countries most affected by this strike. The IATA (International Transport Association) estimates that our country will have a loss of 114 million passengers in 2020, which will mean a decrease in income of 15,500 million dollars.  

The aid to Iberia will be delivered through soft loans via ICO (Official Credit Institute) and, for the time being, there will be no entry into the company's capital. However, at the end of March the Italian government approved the renationalization of the airline Alitalia, which has been bankrupt since 2017 and has already gone through several rescues. The Italian airline, which has not made a profit since 2002 and is in bankruptcy proceedings, will be controlled by the Ministry of the Economy itself.

The French and Dutch states have decided to rescue Air France with aid of up to 4 billion in the form of bank loans guaranteed by the State and the remaining 3 billion in exceptional loans from the State as shareholder, as it holds 14% of the airline. The Dutch participation will be between 2 and 4 billion euros. The company itself has acknowledged that it is losing 25 million euros every day and does not expect to return to normal until 2022. Bruno Le Maire, France's Minister of Economy, said at the beginning of the coronavirus crisis that he would not temper his pulse when it came to nationalizing strategic companies. 

Although this point has not yet been reached, the airline Air France has received official backing and also the automotive giant Renault, to which the state will provide a loan of 5 billion. In both companies, which were privatized in the 1990s, the state holds 15% of the shares today. Although the government has explained that the state's push comes with conditions: Air France is obliged to reduce its impact on the environment. 

Lufthansa has also admitted that it will need aid and Germany, Switzerland, Austria and Belgium are open to contributing up to 10 billion euros. The low-cost airline Norwegian wants to convert up to 85% of the debt of its creditors into shares and launch securities to access state aid for the coronavirus, according to the plan that the company has made public. The goal is to convert up to 1.1 billion euros of debt with lessors into securities. The Norwegian Parliament has approved plans to restructure companies at risk of bankruptcy to approve a debt-to-equity conversion plan from which Norwegian has benefited.  

To avoid that each country takes its own solutions, the Minister of Transport, Mobility and Urban Agenda, José Luis Ábalos, explained on Monday during his appearance at the Congress that Spain wants to adopt a common position with Germany, France and Italy to organize public aid to airlines. Ábalos held a meeting by videoconference on the 24th with his counterparts from the other three countries to agree on a common position when the issue is discussed in Brussels. For her part, the Minister of Industry, Trade and Tourism, Reyes Maroto, also pointed out this Monday that air transport is key to tourism and that, therefore, airlines must receive specific support to ensure their viability.  

In view of the economic debacle that the pandemic is causing on the continent, the European Commission is considering modifying the legislation on State aid to allow States to enter the capital of companies and even to nationalize them. The problem with this policy on Europe's single market is that it may lead to a significant distortion of competition, because there are countries with much more fiscal scope than others to provide aid to their companies. The Community executive has called on countries to help companies temporarily by means of debt subordinated to the loans they receive from their governments until a decision is taken. 

On the other side of the Atlantic, with limited government intervention, the U.S. Treasury Department has also begun to distribute an additional $9.5 billion in aid to airlines to help them meet their employees salaries. This measure is included in the stimulus package approved by Congress last month to inject up to $25 billion in liquidity into the sector.