airBaltic’s CEO, Martin Gauss, has defended airline bailouts as essential for rebuilding infrastructure following the current crisis. In an exclusive interview with Simple Flying this week, Gauss likened bailouts to rebuilding roads after a war.
Airline bailouts have become a hot topic around the industry. Bailouts have varied dramatically between airlines. The Lufthansa Group, for example, is currently seeking to get a €9 billion ($10.1 billion) past shareholders. While everybody has an opinion on bailouts, however, not all are positive. Indeed, throughout the current crisis, Ryanair’s Michael O’Leary went as far as to say that Lufthansa seeking bailouts was like a drunk uncle at a wedding.
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Many politicians around the world have been likening fighting the COVID-19 virus to that of fighting a war. airBaltic’s CEO, Martin Gauss, didn’t shy away from such metaphors when justifying why aid is needed by airlines. Gauss said,
“I think this is an infrastructure where, like after a war, countries are rebuilding their infrastructure. And as it is happening everywhere in the world without an exception, I think it is good that it happens. It is good to reinstate infrastructure. If we would have had bombs on streets, nobody would question to repair the streets. Therefore, airlines using air streets to go from A to B also should be repaired. And that’s what’s happening.”
Consequences could be devastating
Gauss further pointed out that the consequences of letting airlines fail could be devastating for their countries. He used Lufthansa as an example, saying, “It used to be, revenue-wise, the biggest airline in the world.”
He pointed out that if Lufthansa were just to stop operating, Germany would lose many global connections. It would take a long time for all of Lufthansa’s long-haul routes to be replaced if they all were. As such, this would not only impact Germany, but also Europe, and the world.
Since the crisis began, airBaltic has received additional equity. The Latvian state has increased its ownership of the airline from 80.05% to 91%. This accompanied an investment of up to €250 million ($281 million) into the equity of airBaltic. On this Gauss commented:
“I’m also now in the position that I had to reach out to my shareholders and say, could you please increase my equity?”
Nothing wrong done by the airlines
Gauss pointed out that airlines are seeking bailouts for a crisis that is not their fault, commenting:
“Nobody damaged deliberately revenues of airlines. It was a side effect of COVID as it is in so many other industries now.”
Gauss also hinted that we should expect more bailouts before the current crisis is over.
“You see, everyday, headlines of new rescue packages, which are there to cover the time while there was no flying. But what about the time when you are flying and you’re not flying with profits?… I think we will see airlines struggling, especially towards the end of this year, because of the losses they had and now the time where they will not produce profitable flying from the very beginning.”
What are your thoughts on airline bailouts? Let us know what you think and why in the comments!