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Struggling airlines still waiting for gov’t help

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REUTERS

By Arjay L. Balinbin, Reporter

STRUGGLING local airlines are hoping they will soon receive government support that would help ensure their survival amid the crisis.

Philippine Airlines (PAL), Cebu Air, Inc. (Cebu Pacific), and Philippines AirAsia, Inc. are awaiting the passage of the proposed P1.3-trillion stimulus package called the ARISE (Accelerated Recovery and Investments Stimulus for the Economy) bill, which would allocate around P70 billion in assistance to the transportation sector this year.

The House of Representatives approved the bill on third and final reading on June 4. It is pending at the committee level at the Senate.

“Like all other airlines, PAL is hoping to see the stimulus bill passed as soon as possible because government support is necessary for all heavily impacted industries to recover from this pandemic. We expect to access or tap government support that is made available,” PAL Spokesperson Cielo C. Villaluna told BusinessWorld in a phone message on Friday.

The Transportation department had proposed that the stimulus package include wage subsidies for airline employees, augmentation of airline companies’ working capital, as well as funds for the payment of fees and charges due to the different national airport authorities.

Cebu Pacific Director for Corporate Communications Charo L. Lagamon said in a separate phone message: “We are one with the Air Carriers Association of the Philippines (ACAP) in our appeal for help.”

ACAP, which is composed of PAL, Cebu Pacific, AirAsia, Air Philippines Corp. (PAL Express), and Cebgo, Inc., told Congress in May that they need P8.6 billion in monthly assistance to sustain their operations during the pandemic.

ACAP Executive Director and Vice-Chairman Roberto C.O. Lim at that time said the funds would cover P1.3 billion for wage subsidy, P500 million for payment of fees, and P6.8 billion for working capital.

AirAsia Group Chief Executive Officer Anthony Francis Fernandes said its Philippine unit is currently in various stages of bank loan applications. Philippines AirAsia will apply for the government-guaranteed loan under the stimulus package, “with an expected positive outcome,” he said in a statement on July 9.

The coronavirus pandemic has heavily impacted the global aviation industry, amid widespread travel restrictions and a collapse in tourism demand.

The International Air Transport Association (IATA) has said about 500,000 workers in the country were at risk of displacement. Asia-Pacific airlines’ May traffic had plunged 98% compared to the year-ago period, while airlines’ capacity fell 95.1%, it said.

Alexandre de Juniac, IATA’s director general and chief executive officer, said the industry is in “very early stages of a recovery in air travel” and government support is needed to ensure recovery.

“Governments also need to avoid adding blockers to the recovery, such as implementing entry quarantines. They have the same impact as outright travel bans and will keep economies closed down to the benefits of aviation connectivity. Governments should also avoid new fees and charges to cover the cost of COVID-19 (coronavirus disease 2019) related health measures (such as testing and contact tracing), which will make travel less accessible,” Mr. De Juniac said.

Local airlines have started to lay off employees. In June, the AirAsia group announced that it would trim 12% of its Filipino staff. Cebu Pacific will cut 800 more jobs next month, in addition to the 150 flight attendants let go in March.

PAL earlier slashed 300 jobs in February after announcing 2019 losses.

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