Airlines to receive loan from Bayanihan 2

Airlines to receive loan from Bayanihan 2

The Air Carriers Association of the Philippines (ACAP) on Monday said about P700 million had been allocated for local airlines from the law that sets out the government’s recovery plan in response to the coronaconomy, on top of the P10 billion they await from state financial institutions to lend to or invest in the industry.

ACAP is composed of Philippine Airlines, Inc. (PAL), Cebu Air, Inc. (Cebu Pacific), Philippines AirAsia, Inc., Air Philippines Corp. (PAL Express), and Cebgo, Inc.

The Bayanihan to Recover as One Act (Bayanihan II), which was signed by the President Duterte on Sept. 11, has set aside P9.5 billion for the recovery programs of the Transportation department. Of that amount, P2.6 billion is dedicated to assisting the critically hit businesses in the transportation industry.

ACAP Executive Director and Vice-Chairman Roberto C.O. Lim told BusinessWorld in a phone message on Monday that air, land, and sea sectors are expected to get around P700 million each and about P7 billion is for the land-based transport workers and to build bicycle lanes,

Each carrier is expected to receive around P140-million loan assistance under the economic stimulus package, Mr. Lim noted. He said further that government financial institutions (GFIs) are “supposed to get P30 billion equity infusion to give them funds to lend or invest.”

“If you divide that into the land, air, and sea [sectors], the air sector may get loans/equity of around P10 billion or P2 billion if to be divided equally among the five carriers. GFIs hopefully will issue out the rules quickly. Note that a GFI loan evaluation process or investment due diligence process takes time — the entire process can easily take two months before approval is obtained; so it is only December at the earliest that the transport sectors can see the money,” Mr. Lim explained.

“If the rules of the Department of Transportation (DoTr) say it is a waiver of fees, that will be a good assistance. ACAP carriers pay around P500 million per month. A waiver as distinguished from deferral will help,” Mr. Lim added.

Lim noted the ball is now with the executive branch to come out with rules quickly, so the intended beneficiaries can apply. Airlines expect a 55% decline in 2020 air traffic, according to the airline trade group International Air Transport Association (IATA).

IATA also said that while aviation faces a long-haul recovery, continued aid and support for the sector are desperately needed. “With recovery to 2019 levels now slipping to 2024, financial support, in forms which do not further load crippling debts onto the industry, will be necessary if an even sharper contraction in airline capacity and jobs is to be avoided,” it added.

Read more: BusinessWorld ;

-StockBytes PH, September 15, 2020.

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Airlines to receive loan from Bayanihan 2