The Covid Corporate Financing Facility (CCFF) scheme has been a lifesaver for companies of all shapes and sizes. Offered to only the largest corporations that made the biggest contributions to the UK, the scheme has seen more than £80 billion ($109 billion) in funding made available. While much has been paid back, some remains unpaid, and travel firms make up the lion’s share of the money still owed.
Still $4.6 billion owing
The COVID crisis has made it difficult for airlines around the world to maintain profitability, and many have reached out to the state for assistance. In the UK, however, strict travel policies have made it even more difficult to fly, making for a longer recovery for British airlines than some in other geographies.
The UK government did put its hand in its pocket to support its airlines, although perhaps not to the same extent as some other nations. Nevertheless, several airlines and travel companies did benefit from the Covid Corporate Financing Facility (CCFF) scheme.
The CCFF came to an end in March 2021, having helped 230 companies draw around £80 billion ($109 billion) in funding. By March, 44 corporations still owed more than £9 billion ($12 billion) to the Bank of England. Now, that number is down to just 17, owing a combined total of £3.4 billion ($4.6 billion).
A report by This Is Money highlights that, of the 17 firms that still owe money to the CCFF, nine are either airlines or travel-related businesses. Between the nine firms, some £2.4 billion ($3.3 billion) is yet to be repaid to the government. This represents 70% of the total amount outstanding under the CCFF.
Who owes the most?
As of October 6th, the travel companies with the most to repay include four airlines, one airport, a travel agent and a bus tour company. Also listed are the firm behind the O2 Arena in London, some housing associations, an energy services company and three universities.
Of the airlines themselves, the total debt is £1.4 billion ($1.9 billion). The one with the most to repay is Ryanair, with a debt level of £600 million ($815 million). easyJet and Wizz Air both owe £300 million apiece ($408 million), while leisure airline Jet2 needs to repay £200 million ($272 million).
The airport which has received yet to be repaid support is London Gatwick. The airport has been one of the worst-hit in Europe, with various airlines quitting their position and pulling out either temporarily or permanently. While things are slowly getting back to normal, the airport still has a debt burden of £275 million ($373 million) to repay.
Stagecoach, a Scottish transport group, still owes £300 million ($408 million), travel agent Flight Center £115 million ($156 million), and airport retailer SSP, which runs the Upper Crust and Ritazza cafes, owes £300 million ($408 million).
What happens next?
The CCFF worked through the Bank of England holding ‘commercial paper’ on each of the companies to which it lent money. This is a short-term unsecured promissory note issued by the company which pays a fixed rate of interest. The commercial papers have a maturity of between a week and 12 months, but all the CCFF loans are required to be paid back by March 2022.
Late payment will result in charges being added to the total amount owed by the firm. However, it is unlikely that these companies will allow such a debt to drag on longer than necessary. With the traffic light system scrapped and proposals in motion to end expensive PCR testing, travel firms have a much more positive outlook ahead.