“We need bold and active financial support”… High interest rate loan burden
On the afternoon of January 31st, Incheon International Airport Terminal 1 Arrival Hall [연합뉴스 자료사진]
(Seoul = Yonhap News) Reporter Choi Pyeong-cheon = The government has come up with measures to support the aviation industry, which is struggling with the aftermath of the novel coronavirus infection (Corona 19), but the aviation industry responds that it is not enough to extinguish the’fire on the foot’ .
On the 3rd, the Ministry of Land, Infrastructure and Transport announced’Measures to overcome the corona crisis in the aviation industry and take a leap forward’ that includes support for low-cost airlines (LCC) and reductions in airport facility usage fees.
The aviation industry welcomed full support from the government this year following last year. It is generally positive about support such as reducing airport facility usage fees and reviewing reductions in aircraft acquisition tax and property tax.
However, they expressed regret for the lack of direct financial support to overcome the immediate liquidity crisis.
The government expects the airline to suffer a shortage of funds of 200 billion won by the third quarter of this year, and plans to review the availability and scale of support through due diligence.
According to the government’s announcement, Jeju Air[089590], T’way Air[091810], Jin Air[272450], Air Busan[298690] It is expected that support of up to 200 billion won will be provided, centering on the LCC.
However, the conditions for airlines to receive government support were not specified in the announcement of the Ministry of Land, Infrastructure and Transport. It is pointed out that LCCs will find it difficult to obtain government loans this year if conditions are strict like last year.
Since Corona 19, the government has provided liquidity support of KRW 267.7 billion to Jeju Air, KRW 40 billion to Jin Air, KRW 45 billion to T-Way Air, KRW 138.8 billion to Air Busan, and KRW 30 billion to Air Seoul.
Jin Air and T’way Air could not apply for the fund because they did not meet the conditions for applying for the Basic Industry Stability Fund, with a total borrowing of 500 billion won or more and the number of workers of 300 or more. The two airlines, which had managed to reduce debt and borrowings before the coronavirus outbreak, did not receive government support, and reverse discrimination occurred.
An industry official said that even if they are eligible for the Basic Industry Stability Fund, the loan interest rate is far higher than the marketplace, so airlines are bound to hesitate to apply for the fund.
Asiana Airlines[020560]In the case of the case, it is known that the interest rate for the basic industry stabilization fund is in the late 7% range with a 3-year maturity due to the addition of the market interest rate and the additional interest rate considering the business risk.
Asiana Airlines, which applied for a key industry stabilization fund of 2.4 trillion won last year, used a fund of 300 billion won, and the interest is estimated to be around 20 billion won.
This is compared to the United States, which provides low-interest loans to airlines at 1% per year for the first five years at maturity of 10 years.
Even considering the difference in size, it is a disappointment to airlines that the scale of government subsidies or loan support is smaller than that of overseas.
The United States provided 6.7 trillion won to Delta Air Lines and 7.1 trillion won to American Airlines. In Europe, British Airways received 500 billion won and EasyJet 900 billion won.
The uncertainty of the timing of the government’s financial support is also a voice saying that it did not take into account the urgency of the airline, which is facing a crisis immediately due to the Corona 19’direct hit’.
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LCCs, which recorded the largest deficit last year, are unlikely to reduce the deficit this year.
Jeju Air is highly likely to fall into capital erosion without additional cash support in the first half of this year. As of the announcement in September last year, Jeju Air’s total capital was 255.5 billion won and the capital was 199.2 billion won. In the first quarter of this year, if the deficit is similar to that of last year, capital erosion will inevitably occur, in which total capital outpaces capital.
Although it is highly likely to face a liquidity crisis in the first quarter of this year, the government maintains its principled position to determine the scale of support after due diligence.
In addition, it is pointed out that the analysis of the aviation market was lacking in the assumption that until the third quarter of this year was assumed as a financial support period.
Even if the Corona 19 vaccine is distributed this year, it is predicted that air passenger demand will not recover until the second half of this year. Like last year, international passenger performance this year is expected to decrease by 90% compared to pre-Coronavirus.
An airline official said, “Benefits such as reduction of airport usage fees are the same as’danbi’ from the airline’s point of view. In fact, the most urgent thing is liquidity support. Only when funding is provided in a timely manner can overcome the corona crisis.”
Another airline official said, “It can be seen that the government gave the airline a’futon’ in cold weather,” he said. “But for people who are starving because they have nothing to eat,’rice’ is more urgent than a blanket.”
The aviation industry believes that indefinite support is needed from the current maximum of 180 days to the end of the corona crisis in the case of maintaining employment through paid leave.
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In addition, as passenger demand is expected to recover first, centering on domestic flights, it is a position that the fee for use of domestic business facilities in the airport should be reduced. Currently, only office rents in international terminals are reduced.
An industry insider said, “Because of the nature of the aviation industry, once it collapses, it will take astronomical time and cost to rebuild the infrastructure.” Said.
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2021/03/03 17:20 sent