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* New Zealand, U.S. Senate Republicans, Norway offer aid
* Terms include possible conversion to govt equity stakes
* Carriers try to place staff with other employers
* S&P cuts EU airlines' credit ratings
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By Victoria Klesty and Jamie Freed
OSLO/SYDNEY March 20 (Reuters) - Shattered airlines were
left counting the cost of government support as countries from
the United States to New Zealand set out conditions for bailouts
needed to absorb the shock of the coronavirus pandemic.
Conditions include provisions that loans may convert to
government equity stakes, while U.S. airlines cannot increase
executive pay or provide "golden parachutes" for two years.
In a move that would provide more immediate relief to the
broader industry, Brussels agreed to suspend a rule requiring
airlines to run most of their scheduled services or else forfeit
landing slots until October. Final go-ahead may come next week.
The waiver would also apply retroactively from Jan. 23 to
Feb. 29 for flights between the European Union and China or Hong
Kong.
Norway offered to back airlines with credit guarantees worth
up to 6 billion Norwegian crowns ($537 million), but stricken
budget carrier Norwegian Air Shuttle ASA may struggle
to comply with the tough terms.
In New Zealand, the government offered its national carrier
a NZ$900 million ($510 million) lifeline, which Finance Minister
Grant Robertson said would help it survive after the government
banned all non-resident arrivals to the country.
"That puts us in a very good position over the next several
months," Air New Zealand chief executive Greg Foran
told reporters of the loan, which it will not draw down
immediately.
"We would expect the airline industry will look different at
the end of this. Not all airlines are going to survive."
Air New Zealand's bailout also depends on the
company suspending its dividend and paying interest rates of 7%
to 9%.
Under the $58 billion U.S. proposal for passenger and cargo
carriers, the U.S. Treasury Department could receive warrants,
stock options, or stock.
"We are not bailing out the airlines or other industries –
period," U.S. Senate Appropriations Committee Chairman Richard
Shelby said. "Instead, we are allowing the Treasury Secretary to
make or guarantee collateralized loans to industries whose
operations the coronavirus outbreak has jeopardised."
Finland, which owns a 56% stake in Finnair, said
it would guarantee a 600 million euro ($645 million) loan for
the state carrier. The firm said it was implementing a funding
plan that included drawing on available credit lines, sale and
leasebacks of planes. Its stock jumped 16%.
The International Air Transport Association (IATA) has
forecast the industry will need up to $200 billion of state
support, piling pressure on governments facing demands from all
quarters and a rapid worsening in public finances as economies
slump.
"Money is very tight in most countries, so governments need
to step back and be hard-nosed about any form of rescue ... but
it all must come with strict conditions or strings, attached,"
Shukor Yusof, head of aviation consultancy Endau Analytics, said
in an email.
JOBS GONE
Underscoring worries about carriers' debt and ability to
weather the storm, agency Standard & Poor's on Friday cut its
credit ratings on Europe's top four airlines, Lufthansa, British
Airways owner IAG, easyJet and Ryanair,
and put them on negative creditwatch.
Even with financial assistance, airlines around the world
are placing thousands of workers on unpaid leave as they slash
passenger capacity, deepening the shocks to local economies.
BA pilots will have to take two weeks of unpaid leave in
each of April and May, and a cut to basic pay spread over three
months, the company said on Friday in a joint statement with the
British Airline Pilots' Association.
Britain's Heathrow Airport, usually Europe's busiest
airport, is cutting costs by cancelling executive pay, freezing
recruitment and reviewing all capital projects.
Air Canada has more than 5,100 excess cabin crew
after cutting its flying schedule and plans to start notifying
them they will be laid off at least temporarily, its flight
attendants union said.
The airline said it had begun talks with unions about
temporary lay-offs but did not have final numbers yet.
On Friday, Cathay Pacific Airways said it would
slash nearly all passenger capacity as new government curbs make
travel more difficult.
Its low-cost carrier, HK Express, will suspend operations
from Monday until April 30, bringing forward plans to put
employees on unpaid leave.
To preserve cash, airlines are also cutting executive pay,
suspending dividends, selling planes, and flying cargo on empty
passenger jets. This has led to surging cargo rates due to high
demand - the only bright spot in the industry.
($1=1.7652 New Zealand dollars)
(Reporting by Jamie Freed in Sydney and David Shepardson in
Washington; additional reporting by Praveen Menon in Wellington,
Tracy Rucinski in Chicago, Sarah Young in London; Editing by
Gerry Doyle, Mark Potter and Josephine Mason)
