Airlines fly close to downwards debt spiral

have increased net debt by 63% to $112 billion, according to analyst estimates compiled by Refinitiv. That equates to a whopping 4.7 times next year’s EBITDA. In 2019, the year before the pandemic started, the absolute figure was $69 billion, just 1.7 times that year’s EBITDA.Getting back to 2019-style amounts of leverage will involve years of pain for shareholders. Government support packages in the United States and Europe preclude the payment of any dividends until state loans are repaid.

Another solution is to pass the hat around to shareholders once again. But Omicron has squashed share prices anew, increasing the burden on equity investors. The additional net debt taken on board in the last two years amounts to two-thirds the six’s current market value, which itself could be inflated. Even when the viral storm clouds eventually pass, the outlook for airline shareholders looks bleak.- The chief executives of major U.S. airlines were due to appear before Congress on Dec.

- Britain’s major airlines have called for more economic support to offset the impact of travel restrictions aimed at curbing the spread of the Omicron coronavirus variant, the Financial Times reported on Dec. 13. - The paper said industry executives would request the extension of pandemic loans issued by the government, and potentially another furlough scheme for aviation workers.

- Air France-KLM said on Dec. 13 it had paid back 500 million euros of a 4 billion euro loan backed by Paris, and had negotiated to extend the maturity of the outstanding debt by two years to 2025.Editing by Lauren Silva Laughlin and Sharon LamReuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day.

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