Article 50STK A few points to ponder before beginning a bailout of airlines | Nils Pratley

A few points to ponder before beginning a bailout of airlines | Nils Pratley

by
Nils Pratley
from Economics | The Guardian on (#50STK)

Keep it industry-wide, don't support shareholders, and offer simple non-lending support

Bail out the airlines? Clearly, some form of government support may be needed soon, but a bailout is a misleadingly broad term. Ministers should keep a couple of principles in mind as they respond to ill-defined calls for help.

First, financial assistance - which could be loan guarantees or secured lines of credit - is best offered on an industry-wide basis on equal terms to everybody. Those terms also have to be extremely favourable to the state. If an airline wants a state loan secured against an aircraft, for example, it cannot expect that aircraft to be valued at pre-coronavirus prices.

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