The country’s biggest airlines are urging lawmakers to include loan guarantees for their industry in a proposed stimulus bill to support sectors devastated by the coronavirus pandemic.
Roberto Lim, vice chair of the Air Carriers Association of the Philippines (Acap), clarified on Wednesday that the airline sector was not asking for any cash support but instead help in securing loans as banks put their credit lines on hold.
“In this time of crisis, institutions are all afraid to release funds from the airlines’ existing credit lines that are duly collaterized, much less grant new ones,” Lim told the Inquirer in an interview on Wednesday.“Only the government can bring confidence to the system by directing banks to lend to vital industries to bridge the gap,” he said.
Lim said during the Senate hearing on Monday that the country’s three major carriers—Philippine Airlines, Cebu Pacific and AirAsia Philippines—would need help to the tune of P8.6 billion a month.Most of the amount, or P6.8 billion, comes from working capital, which Lim said was mostly for aircraft lease payments. Another P1.3 billion was for monthly wages while the airlines pay P500 million a month in airport and navigational fees.
Some senators questioned the figures and said the money could be better used to support the poor. Lim said the airlines were not seeking any cash bailout.
“Since last month, we have written to the executive branch and legislators in both houses. Our immediate request is a credit guarantee scheme and not cash. Private banks need to lend money out but must be given confidence,” he said.“We will pay it back,” he added.
The problem now is restarting operations so airlines can start earning revenues again. With the extension of strict quarantine measures in key markets such as Metro Manila, major airlines said they would continue to suspend flights through the end of May.
“The sooner Acap carriers are allowed to resume flights, the earlier they can generate revenues,” Lim said.
Lim said the airline industry employs about 25,000 workers and supports thousands more when counting allied industries such as the badly hit tourism sector.