South Korea's Ministry of Land, Infrastructure and Transport (MOLIT) will invest W1.55 billion ($1.3 million) in the pre-purchase and prepayment of airline tickets to support local airlines. This accounts for 85% of MOLIT's annual air travel budget, and it envisions broader participation across public sectors, it said on 3 May. The airlines will refund any outstanding prepayments to the relevant agency by the end of this year and must have warranty insurance for this purpose. Under this scheme, the ministry targets to purchase 30% of local LCCs' air tickets for domestic travel. The ministry says: "It will be a great help to airlines that are struggling with temporary liquidity shortages through the pre-purchase and prepayment of air tickets from the central government, local governments, and public institutions." MOLIT also encourages voluntary participation by the private sector, in light of industry-wide support measures recently announced to mitigate the impact of the Covid-19 outbreak on South Korea's economy. From March to June, tax deductions on personal credit or debit card spending have been doubled, from 40% to 80% for spending on transportation.

Source: Cirium

South Africa's Comair is in "a very difficult financial position" due to coronavirus-related travel restrictions and does not anticipate being able to resume flights until October or November, the carrier has disclosed. In a 30 April cautionary announcement to shareholders, Comair writes: "Although the company was experiencing financial headwinds prior to the Covid-19 outbreak, the five-week lockdown has caused the situation to rapidly deteriorate to a point where the company finds itself in a very difficult financial position." It advises shareholders to "exercise caution when dealing in the company's securities until a further announcement is made". Comair says it has been "unable to operate" since 17 March and none of its business divisions have generated any revenues. Citing the South African government's plan to gradually ease lockdown restrictions, Comair says it does not expect to begin operating before October or November. The airline – which operates flights as a British Airways franchise carrier and under the Kulula low-cost brand – has taken a number of actions aimed at mitigating the impact of the lockdown on its finances. These include initiating plans to reduce the number of executives and other staff, terminating its planned acquisition of aircraft leasing specialist Star Air Cargo, and beginning negotiations with banks over a possible convertible loan note issuance. Comair incurred an operating loss of R562 million ($31 million) in the second half of 2019, which it attributed mainly to South African Airways' having gone into business rescue, saying the flag carrier owed it R790 million. Operating expenses in the six months ended 31 December increased 13% to R3.6 billion as a result of "significantly higher fleet and maintenance costs" and the Boeing 737 Max grounding.

Source: Cirium

Lufthansa pilots represented by trade union Vereinigung Cockpit have offered to waive up to 45% of their salaries for two years, in return for job security, to help the airline navigate the coronavirus crisis. In March, the union and airline agreed short-time working arrangements for pilots – a first in Lufthansa's history. The target was a 50% reduction in flightcrew costs. But Vereinigung Cockpit says the measure is "not enough" to bring the airline through a "crisis with an uncertain length". The union says the partial waiving of salaries and an additional reduction of current short-term work pay will together deliver savings of €350 million ($374 million) over a two-year term to 30 June 2022. Lufthansa management has met with staff representatives and unions today to discuss the airline's situation, Vereinigung Cockpit notes. In return, the union demands that Lufthansa Group's senior executive team is "committed" to employees and does "everything possible to overcome the crisis together with [staff] in a social partnership". The union asserts that a potential "protective shield" state-aid procedure would not meet those requirements. Lufthansa Group is in talks with governments in Germany, Austria, Belgium and Switzerland to secure the company's solvency, it says. Vereinigung Cockpit president Markus Wahl states that pilots are committed to a "special responsibility" as staff in the "upper pay level". He says pilots would not shy away from "painful cuts", but adds: "It is important that the jobs are preserved and protection against dismissal is agreed." Vereinigung Cockpit notes that the offer covers pilots employed under a collective agreement spanning flightcrew at Lufthansa mainline, the cargo operation, the Germanwings unit, and the flight-training organisation. Lufthansa has not adopted short-time working for Germanwings pilots and earlier this month announced a plan to close the operation, which has been suspended as part of capacity cuts amid the coronavirus crisis. Cirium understands the operation has not yet been dissolved. Vereinigung Cockpit tells Cirium that its salary-waiver offer is an attempt not to reverse the decision to close Germanwings but to improve job prospects for pilots at that carrier. The union notes that in 1992 Lufthansa pilots waived a third of their salaries to help the airline through an economic crisis.

Source: Cirium