By Victoria Klesty and Jamie Freed
OSLO/SYDNEY (Reuters) - Shattered airlines were left counting the cost of government support as countries from the United States to New Zealand set out conditions for bailouts needed to absorb the shock of the coronavirus pandemic.
Conditions include provisions that loans may convert to government equity stakes, while U.S. airlines cannot increase executive pay or provide "golden parachutes" for two years.
In a move that would provide more immediate relief to the broader industry, Brussels agreed to suspend a rule requiring airlines to run most of their scheduled services or else forfeit landing slots until October. Final go-ahead may come next week.
The waiver would also apply retroactively from Jan. 23 to Feb. 29 for flights between the European Union and China or Hong Kong.
Norway offered to back airlines with credit guarantees worth up to 6 billion Norwegian crowns ($537 million), but stricken budget carrier Norwegian Air Shuttle ASA <NWC.OL> may struggle to comply with the tough terms.
In New Zealand, the government offered its national carrier a NZ$900 million ($510 million) lifeline, which Finance Minister Grant Robertson said would help it survive after the government banned all non-resident arrivals to the country.
"That puts us in a very good position over the next several months," Air New Zealand <AIR.NZ> chief executive Greg Foran told reporters of the loan, which it will not draw down immediately.
"We would expect the airline industry will look different at the end of this. Not all airlines are going to survive."
Air New Zealand's <AIR.NZ> bailout also depends on the company suspending its dividend and paying interest rates of 7% to 9%.
Under the $58 billion U.S. proposal for passenger and cargo carriers, the U.S. Treasury Department could receive warrants, stock options, or stock.
"We are not bailing out the airlines or other industries – period," U.S. Senate Appropriations Committee Chairman Richard Shelby said. "Instead, we are allowing the Treasury Secretary to make or guarantee collateralized loans to industries whose operations the coronavirus outbreak has jeopardized."
Finland, which owns a 56% stake in Finnair <FIA1S.HE>, said it would guarantee a 600 million euro ($645 million) loan for the state carrier. The firm said it was implementing a funding plan that included drawing on available credit lines, sale and leasebacks of planes. Its stock jumped 16%.
The International Air Transport Association (IATA) has forecast the industry will need up to $200 billion of state support, piling pressure on governments facing demands from all quarters and a rapid worsening in public finances as economies slump.