COVID-19: American Airlines Received The Most State Bailout in the World

LONDON – In a report produced by ABL Aviation, American Airlines has been seen to have received the largest amount of bailout in the world during the COVID-19 pandemic.

This report stemmed from the words of the International Air Transport Association (IATA) back in March 2020, where the coronavirus pandemic resulted in airlines around the world needing around $200bn of government support to help them see through the crisis.

Then after that, the former Director-General Alexandre de Juniac then estimated that an additional $70-80 billion would be needed to stabilize the industry before airlines would start making a profit again.

Tomás Del Coro from Las Vegas, Nevada, USA, CC BY-SA 2.0 https://creativecommons.org/licenses/by-sa/2.0, via Wikimedia Commons

Was the Forecast Accurate?

Such forecasting by IATA has proven to be spot on, with more than 230 airlines receiving around $198.78 billion worth of state aid since the pandemic began.

Analysts believe that the current figure could rise up to $206 billion, but there are indications that recovery is beginning, especially with some airlines generating profits for the first time.

Nicky Boogaard from Hardinxveld-Giessendam, Netherlands, CC BY 2.0 https://creativecommons.org/licenses/by/2.0, via Wikimedia Commons

The extra $6bn will see the likes of TAP Portugal receive a further injection of 990 million EUR in 2022 as well as Qatar Airways already receiving more than $3bn in state aid back in September.

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Such bailouts, either way, are dubbed to continue however small or big they may be.

A study that was discussed in the report stated that 81% of capital market investors expect to see more regional carriers receive more government bailouts, while 74% expected more state bailouts of national airlines.

So Which Airlines Received The Most State Bailouts?

Anna Zvereva from Tallinn, Estonia, CC BY-SA 2.0 https://creativecommons.org/licenses/by-sa/2.0, via Wikimedia Commons

ABL Aviation released information surrounding state bailouts during the pandemic, with the following five airlines receiving the highest amounts of state bailout:

American Airlines – $20.34bn
United Airlines – $18.39bn
Delta Air Lines – $11.9bn
Air France – $9.05bn
Lufthansa – $7.74bn

Juke Schweizer, CC BY-SA 4.0 https://creativecommons.org/licenses/by-sa/4.0, via Wikimedia Commons

As we can see from that information, three of those five airlines are from the United States, which comes as no surprise given the amount of investment the American Government placed on airlines via the CARES ACT.

North Charleston from North Charleston, SC, United States, CC BY-SA 2.0 https://creativecommons.org/licenses/by-sa/2.0, via Wikimedia Commons

The United States government, in total, provided around $74 billion in government COVID-19 aid. However, this number has increased during the Biden Administration, with the total figure lying at $93.4 billion since March 2020.

European governments came second in this, totaling around $50.2 billion, with Asia-Pacific coming third at $40.8 billion.

Overall

What this is highlighting is exactly how damaging the COVID-19 pandemic has been to the airline industry and to the extent that support was needed.

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Even so, airlines such as American Airlines and United may have been shown to be asthmatic in structure, especially needing so much of the CARES ACT bailout. Critics would argue that the airline sizes are more substantial to that of Air France and Lufthansa, hence the higher figures.

As we continue to approach the recovery side of this pandemic, airlines will of course be looking to pay these bailouts off as fast as possible, in order to return to profitability as fast as possible.