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20 February 2020

China considers cash injections, mergers to bail out airlines

The airline industry, particularly in China, has been roiled by the epidemic after the virus was first detected in the city of Wuhan

Discussions are ongoing and no decision has been made on what the final bailout package will look like/Bloomberg

by Bloomberg

China is considering measures such as direct cash infusions and mergers to bail out an airline industry crippled by the coronavirus outbreak.

One proposal involves allowing some of the nation’s biggest carriers—which are controlled by the state—to absorb smaller ones suffering the most from the collapse of travel.

Additionally, another option being explored is for the government to inject billions of dollars to bail out the industry. Discussions are ongoing and no decision has been made on what the final bailout package will look like.

In an unprecedented move, global carriers stopped about 80 per cent of their China flights and local airlines grounded enough planes to carry 10.4 million passengers, reducing China to a smaller international aviation market than Portugal.

The government measures under consideration also include offering loan repayment waivers and more favourable leasing terms for aircraft.

Last week, the Civil Aviation Administration of China (CAAC) said the government would support measures to help the beleaguered industry recover, including mergers, but the regulator did not provide details. The government already announced plans to lower taxes and fees for airlines.

The press office at State-owned Assets Supervision and Administration Commission, which oversees key state enterprises such as major airlines, said it isn’t aware of any such bailout being planned.

China Southern Airlines scrapped about 45 per cent of flights in late January and early February 2020, the highest rate among the nation’s top carriers, followed by Air China and China Eastern Airlines.

RELATED STORIES: Civil Aviation Administration of China China Southern Airlines Air China China Eastern Airlines





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