Airlines to Receive $87 Million in Coronavirus Bailout

EghtesadOnline: As part of the 80 trillion rials ($350 million) economic relief package for the transportation sector approved by the government, airlines will receive 20 trillion rials ($87 million) in loans to help them weather the hardship caused by the new coronavirus.

News ID: ۷۵۰۵۵۳

28 July 2020

According to the Secretary of the Association of Iranian Airlines Maqsoud Asadi-Samani, airlines have been introduced to designated banks and are undergoing the loan approval process.

“Since the beginning of June, airline companies could register at Kara.mcls.gov.ir for the coronavirus loans offered at the lending rate of 12%,” he was quoted as saying by News.mrud.ir.

“Air travel and tourism have been the hardest-hit industries in the early days of the Covid-19 pandemic. Currently, domestic flights are carried out through some airports in the country, but aircraft fly 40-50% short of full capacity to allow social distancing.”

Airports’ Traffic Halves in Q1

Iran Airports Company registered a total of 44,918 takeoffs and landings during the first quarter of the current Iranian year (March 20-June 20) to register a 51% decline compared with the similar period of last year.

More than 4.04 million passengers were transported during the three months under review, indicating a 64% year-on-year decline.

Over 36,793 tons of cargos were handled in spring, which show a 68% fall compared with the corresponding period of last year, IAC's latest report published on its website shows.

A total of 43,479 takeoffs and landings were registered by domestic flights during the three-month period, down 43% YOY. Close to 3.97 million passengers and more than 29,224 tons of cargo were transported domestically, indicating a 56% and 57% decline respectively YOY.

On the international front, 1,439 takeoffs and landings were registered, down by 91% YOY. A total of 75,546 passengers and more than 7,569 tons of cargo were transported to and from overseas destinations, down 97% and 84% respectively compared with the corresponding period of last year.

Similar to previous IAC reports, Tehran’s Mehrabad International Airport was the busiest Iranian airport during the period under review with 18,082 takeoffs and landings, registering a 41% decline.

The airport handled about 1.71 million passengers in spring, showing a 53% decline and around 12,063 tons of cargo, indicating a 55% decrease YOY.

Mashhad International Airport was the second busiest airport with 4,688 takeoffs and landings, indicating a 66% YOY decrease. It transported 521,446 passengers and 3,961 tons of cargos, down 75% and 80% respectively year-on-year.

Shiraz International Airport registered 3,550 takeoffs and landings (a 54% YOY decrease), while transporting a total of 295,143 passengers (a 54% decline) and over 2,558 tons of cargos showing a 69% decrease YOY. The airport ranked third on the list of Iran’s busiest airports during the two-month period.

In the third Iranian month (May 21-June 20), a total of 21,695 takeoffs and landings were registered, which indicate a 31% decline compared with the similar period of last year.

More than 2.01 million passengers and 17,284 tons of cargos were transported during the month, indicating a 47% and 53% fall respectively YOY.

The report shows 21,116 takeoffs and landings were registered by domestic flights from May 21 to June 20, down 19% YOY. Close to 1.99 million passengers and 14,597 tons of cargo were transported domestically, indicating a 35% and 33% decrease respectively YOY.

On the international front, 579 takeoffs and landings were registered, showing an 89% decrease YOY. A total of 31,054 passengers and more than 2,687 tons of cargo were transported to and from overseas destinations, indicating a 96% and 82% decrease respectively YOY.

Iran Airports Company is an arm of the Ministry of Roads and Urban Development, which manages 54 airports across the country.

Month-on-Month Growth

The IAC report also illustrates that the total takeoffs and landings during the third month under review (May 21–June 20) observed a 55% jump in the number of takeoffs and landings in comparison with the preceding month.

Accordingly, the number of passengers and volume of cargos handled during the month also witnessed a 58-66% increase respectively month-on-month.

In case of domestic flights, the takeoffs and landings, as well as the handling of passengers and cargos, increased by 56%, 59% and 73% respectively compared to the month before.

The international front, however, is still awaiting more green lights to regain its footprint.

The number of international takeoffs and landings, as well as the handling of passengers and cargo, during the third month under review observed a 24%, 51% and 33% increase respectively compared with the preceding month.

Hard Hit by Covid-19

The Covid-19 pandemic has had a significant impact on Iran’s aviation industry due to the resulting travel restrictions as well as the slump in demand among travelers, which coincided with the peak travel season in Iran, i.e. Norouz, the Persian New Year holidays (March 20-April 3).

Official figures show airlines are facing a cash flow crisis as the industry is grounded and travel demand has dropped by up to 90% during Norouz, so much so that some of them couldn’t pay their staff.

The number of air passengers reduced by 76% and flights by 90% during Norouz, according to latest data released by Iran Airports Company.

The impact of coronavirus has resulted in Iran's 16 airlines losing up to 30,000 billion rials ($132 million) from February 20 to April 8, Asadi-Samani told Fars News Agency.

Most airlines in the world are facing bankruptcy, according to CAPA—a trusted source of market intelligence for the aviation and travel industry.

British Airways CEO Alex Cruz says today’s coronavirus crisis is more serious than any previous (aviation) crisis.

As the impact of coronavirus and travel reductions sweep through the world, many airlines have probably already been driven into technical bankruptcy, or are at least substantially in breach of debt covenants.

Cash reserves are running down quickly, as fleets are grounded and what flights there are operate much less than half full.

Forward bookings are far outweighed by cancellations and each time there is a new government recommendation, it is to discourage flying. Demand is drying up in ways that are completely unprecedented. Normality is not yet on the horizon, Aviation24 reported.