The Government Tailwind for Air Travel Recovery

While the biggest revenue slump for airlines caused by the coronavirus pandemic is arguably over, the industry still has a long way to go to reach pre-pandemic levels of passenger volume and profit. To avoid bankruptcies, governments around the world have provided airlines with a varying degree of financial aid. As our chart based on data by the International Air Transport Association (IATA) shows, the majority of these aids comes in the form of wage subsidies and loans.

North American airlines have been the chief recipients of boosters to their finances, racking up a total of $105 billion over the course of the last 18 months. Europe comes second with $70 billion, followed by the Asia-Pacific area with $33 billion, while little aid has been allotted to airlines in regions like the Middle East, Africa or Latin America. Next to nonreimbursable wage subsidies, $99 billion of the total of $243 billion come in the form of loans and loan guarantees, further raising the debts of the airline industry as a whole.

Even though the airline sector has been among the ones struck the hardest by COVID-19, bankruptcies were mainly declared by smaller airlines. One of the more higher-profile cases was Germany-based Germanwings, a subsidiary of Lufthansa, which ceased operations in April 2020. Although the publication of individual financial data stopped in 2011, by the end of 2019, the Eurowings segment including Germanwings generated a negative EBIT of $201 million.