Exclusive: Airbus signals government help needed if crisis lasts months - sources
Reuters
Published Mar 17, 2020 09:18AM ET
Exclusive: Airbus signals government help needed if crisis lasts months - sources
By Ilona Wissenbach, Christian Kraemer and Klaus Lauer
FRANKFURT/BERLIN (Reuters) - Europe's Airbus (PA:AIR) has signaled that some government support may be needed if the coronavirus crisis lasts for several months, three people familiar with the matter said.
The prospect of a worst-case scenario in which state help becomes necessary was raised in crisis talks on Monday between Germany's economy ministry and aviation industry representatives including Franco-German-led Airbus, they said.
The type of any government support, and how widely it would be distributed, was not discussed in detail, but most likely options include efforts to promote liquidity such as state-guaranteed credits, one source said.
"We are having regular dialogues with our home nation governments which are all non-public in nature which is why we do not comment on them," an Airbus spokesman said. The German economy ministry did not respond to a request for comment.
U.S. rival Boeing (N:BA) also confirmed talks with White House officials and congressional leaders about short-term assistance for itself and the entire aviation sector.
Boeing said on Monday that ready short-term access to public and private liquidity would be one of "the most important ways" for airlines, airports, suppliers and manufacturers to recover.
So far there has been no discussion of dedicated bailouts or direct cash injections for the aerospace sector, but liquidity is an overriding concern, industry sources said.
Airlines worldwide have suspended or slowed taking jet deliveries and asked governments for broad financial support including loan guarantees.
Aviation stocks have fallen sharply across the board, with Airbus down 9% at 1307 GMT on Tuesday, a day after Boeing plunged 24%.
Airbus has about 16 billion euros in cash and needs some 5.5 billion euros a month, a person familiar with Monday's discussions said.
It is not receiving pre-payments from customers - usually a key source of cash to keep activities running smoothly - while its cash position has also been dented by the payment of a record 3.6 billion euro fine to settle a bribery case in February.
Although the coronavirus epidemic has caused exceptional upheaval, the timing and scope of any bids by planemakers for public support is a sensitive issue as Airbus and Boeing near the climax of a 16-year trade dispute over subsidies.
The United States imposed tariffs on Airbus jets last year and the European Union aims to win approval to hit back with counter-tariffs in May, though Boeing last week argued it had shut the door on this by giving up a Washington state tax break.
Some European industry executives have called for a truce in the long-running trade war while the coronavirus crisis lasts, arguing tariffs would add to financial pressure on airlines.
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On Tuesday, Airbus said it was halting production at French and Spanish plants for four days after French President Emmanuel Macron announced new measures to restrict people's movements.
Written By: Reuters
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