◼ BUSINESS Bloomberg Businessweek March 30, 202016
muddledthroughundergovernmentsupervi-
sion,includingtheperenniallyunprofitableAlitalia.
Stillotherslimpedalong,likeNorwegianAir,the
discountspecialist.“Throwingliquidityatcrip-
pledairlinesandmembersofthesupplychainisn’t
thebestanswer—farfromit,”saysSandyMorris,
anaviationanalystatJefferiesinLondon.Instead,
governmentsshouldhelpalleviatecostburdens
likeleasingratesbybuyingaircraft,hesays.
TheU.K.governmentmadeclearthatit sees
state-ledbailoutsonlyasthelastresortonceall
otheroptions,suchasraisingfundsfromexist-
ingshareholders,haverundry.“Furthertaxpayer
supportwouldonlybepossibleif allcommercial
avenueshavebeenfullyexplored,”Chancellor
RishiSunakwroteina lettertoaviationexecutives.
Yettheregion’sauthoritiesseemdetermined
tothrowtheindustrya lifeline.EuropeanUnion
competitionauthoritieshavelifteda banonextra
aidforcompaniesthatgotrescuefundinginthe
pastdecade.Regulatorsalsosuspendedanobli-
gationforcarrierstouse80%oftheirtakeoff
andlandingpositionsorrisklosingthemthe
followingyear.
“Governmentswilldowhateverit takestokeep
thingsgoinginaviation,butlikewiththebanking
industryinandafter2008,therewillbelong-term
ramifications,”saysRobertStallard,ananalystwith
VerticalResearch.“Whoknowsexactlywhatthe
detailswillbe,butnationalizedairlineswouldn’t
surpriseme.”
Thegovernmentinterventionrisksundoing
decadesofprivatizationintheEuropeanavia-
tionindustry.BritishAirways,soldbythegovern-
mentin1987,wasamonga hostofstate-owned
entities,fromutilitiestomanufacturers,thatwere
privatized during the Margaret Thatcher era.
Lufthansa, which the German government
began privatizing in 1994, also includes formerly
state-owned SWISS and Austrian Air, which left gov-
ernment hands in 2006 and 2010, respectively.
Airbus SE, a huge pan-European manufacturing
success story, fought a long battle to rid itself of
what it considered burdensome government inter-
vention, which once dictated everything from how
resources were allocated to which executives were
promoted. France and Germany each hold about
11% of Airbus’s stock, and the Spanish state owns
about 4%, though the countries don’t hold direct
sway via board representation.
European politicians have generally avoided
the belligerent tone that’s emerged in Washington
over economic rescue packages, in which
Democrats held up aid legislation trying to attach
conditions such as prohibiting stock buybacksand limiting executive pay. Some safeguards are
already baked into the continent’s system, such
asstronglaborunionsandstate-sponsoredsal-
arysubsidiesthathelpalleviatetheburdenon
temporarilylaid-offworkers.
“There’s no free lunchwhen it comes to
government intervention,” says Mark Manduca,
an analyst at Citigroup in London. Airbus CEO
Guillaume Faury emphasized that airlines and sup-
pliers should be the first recipients of government
aid, and that his company can stem the crisis on
its own for now after scrapping its dividend and
securing credit lines to create a €30 billion safety
net. Most European airlines’ finances aren’t that
strong. Whatever support governments provide,
says Sash Tusa, an analyst at Agency Partners in
London, “will be imperfect, and it will be survival
of the fittest.” �Benedikt Kammel, with Siddharth
PhilipandCharlotteRyanTHE BOTTOM LINE Airlines could lose more than $250 billion in
revenue globally during the Covid-19 pandemic. Carriers are turning
to policymakers for help.Whenthecoronavirusoutbreakcauseda nation-
wideshortageoffacemasksinJanuary,Chinese
officialswerequicktoensurethatkeyplayers
weren’t left without. That included an unlikely one:
Tesla Inc. China’s government helped the U.S. car-
maker secure the sought-after supplies that allowed
it to reopen when many of its competitors were
still shuttered. Tesla received 10,000 masks, cases
of disinfectant that require a government permit,
thermometers, and other materials that allowed it
to restart its factory near Shanghai the first work-
ing day after the Lunar New Year break, according
to state-run media.
The support for Tesla—which also included pro-
viding accommodation for some employees as the● The carmaker got protective gear as it rushed
to restart production during the virus crisisHow China
Gave Tesla a
Helping Hand