Europe's airline giants will never be able to repay loans from owner countries that disrupt a healthy market where companies like Air France are so dependent on injections that they are like crack addicts, according to Ryanair's controversial CEO Michael O'Leary.
In an interview with the Financial Times, Michael O'Leary renews his dissatisfaction with how the airline industry has been given a new "fix" and supported by government funds during the pandemic, which according to the Ryanair CEO has resulted in the sector's market forces being distorted.
”"We, Easyjet, IAG and the other private companies have to compete with these state-backed crack addicts," he said, announcing that 16 cases to appeal the subsidies had been filed in European courts.
So far, Ryanair has lost the five cases that have reached a decision, but Michael O'Leary still believes that there is a high probability that the Irish low-cost airline will be able to succeed in appeals processes.
There has been a clear regional difference in how airlines have been supported in a comparison between Europe, the UK and the US. Within Europe, several states have taken new or increased previous ownership stakes in airlines such as Lufthansa and Air France-KLM, while British and US authorities have certainly distributed support but not taken any shares.
British Virgin Atlantic's CEO, Shai Weiss, believes that this is an important point in creating a healthy aviation market that can stand on its own two feet.
”"Once we get through this, it will be incredibly liberating for the companies that don't have countries in their ownership registers. We will be able to continue the improvement work in a smooth way," he told the newspaper.
However, Virgin Atlantic was denied support money from the British government and instead had to go through the private market to raise new capital to survive the crisis.
Michael O'Leary is on the same track.
”We will become even more efficient and competitive by having to find ways to survive while fighting billions in government subsidies,” he said.
Several analysts point to the fact that airlines are often considered strategically important to countries and regions as an explanation for the large government subsidies. Many of the companies, including several major airports, would not have survived the coronavirus crisis without the subsidies, according to Bernstein analyst Daniel Roeska.
”"States have typically injected money into businesses to maintain air traffic and help companies survive. If governments hadn't done that, we would have had a tidal wave of bankruptcies," he said.
The fact that SAS carried out its second share issue in less than a year at the end of last year, with significant government participation, did not go down well with its low-cost competitors. At the end of November, their industry association intended to report SAS to the European Commission for receiving illegal state aid.
Source:News Agency Direct – DI
