U.K. Labour Party Seeks Government Stakes in Hard-Hit Aviation
U.K. Labour Party Seeks Government Stakes in Hard-Hit Aviation
(Bloomberg) -- The U.K.’s opposition Labour party is seeking greater government support for key sectors like aviation that have been hard hit by the coronavirus crisis, including taking equity stakes.
A permanent reduction in demand may make it difficult for the aviation industry to meet climate-change targets, Shadow Finance Minister Anneliese Dodds said in an interview on Bloomberg TV.
“We need government to be much more actively involved in that sector,” Dodds said. “There will be cases where an equity stake would be the appropriate way forward, one which delivers value for money.”
The comments come as Chancellor of the Exchequer Rishi Sunak prepares to set out plans on Thursday to protect jobs from the economic fallout of the virus. Prime Minister Boris Johnson has imposed new restrictions on the British public to bring the resurgent virus under control, leading to calls for more state support for business.
The slump brought on by the pandemic has reversed decades of growth in the aviation industry, sending airlines and aerospace firms into crisis -- one that has deepened in recent weeks with the rising infection rates. On Thursday, the International Air Transport Association said that airlines may require a fresh round of state support if traffic levels continue to languish.
Sector Aid
Unlike their counterparts in the European Union, U.K. airlines haven’t received sector-specific government support. To date, assistance has been restricted to state-backed loans that were available to all companies that were rated investment grade or higher.
British Airways, owned by IAG SA, has come under fire for its initial plan to cut as many as 12,000 workers, although the carrier has since revised the plan to 10,000 jobs. Richard Branson’s Virgin Atlantic Airways Ltd. was forced to pull together a court-supervised private bailout after restrictions wiped out the trans-Atlantic trade in which it specializes.
Rolls-Royce Holdings Plc, the iconic aircraft engine maker and defense manufacturer, said in the past week it plans to raise at least 2.5 billion pounds ($3.2 billion) to steady its balance sheet for the downturn. Its shares are at 17-year lows.
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