Policy research paper COVID-19 and African airlines: overcoming a liquidity crisis

Abstract

The present paper examines the impact of the coronavirus disease (COVID-19) pandemic on African airlines through a finance lens. It provides insights into the financial requirements of the airlines to survive and recover from the liquidity crisis induced by the pandemic, potential sources of relief and measures to keep them afloat. There are huge differences in the size and structure of the debts of airlines, suggesting that a one-size-fits-all solution may not be appropriate to address their liquidity challenge. Financial support must therefore be tailored to the specific features of airlines. Governments and development finance institutions have generally not channeled COVID-19 relief packages and response funds to airlines. There are multiple measures that they could implement in that regard, such as providing grants, loans and loan guarantees, issuing equity and also deferring or waiving payments of debts, rents, charges and taxes by airlines. It is therefore critical for stakeholders in the industry, notably intergovernmental and air transport organizations, to advocate direct government support for airlines and for them to create a platform to coordinate their efforts towards the survival of the industry, in particular by linking airlines and financial institutions and facilitating access to available funds. Emphasis must also be placed on creating business opportunities for the airlines.