EU finance minister have ruled out giving state aid to loss-making airlines. A joint declaration from the 15 European Union finance ministers specifically today ruled out state aid, in sharp contrast to the $15 billion package that US lawmakers are weighing.
Instead they threw the airline industry a last minute lifeline by saying they would cover the insurance risk of war and terrorism after attacks last week on the United States.
The attacks had threatened to ground some carriers. To prevent this European governments will shoulder liabilities potentially worth billions of dollars.
"It was a case of force majeure...There is no question of airline companies staying on the ground Sunday or Monday", French Finance Minister Laurent Fabius told reporters.
But some ministers were plainly still unhappy and said they had caved in to blackmail.
"We have decided to offer a state guarantee to replace the insurance companies which say they cannot deliver when you need them. It is a kind of blackmail and we have decided to compensate for that", Luxembourg Prime Minister Jean-Claude Juncker told reporters.
Insurance underwriters have given airlines around the world notice that they would cancel existing war risk cover on Monday in the wake of the September 11th attacks, forcing airlines into crisis talks with insurers and governments to find a remedy.
General state aids to help unprofitable companies having to be excluded, the measures proposed are the best way to solve the temporary problems of the airline sector, the ministers said in a joint declaration. The cover will last for one month and comes just in time to keep Europe airborne.
Aviation unions in Ireland have called on the Government for public subsidies to help Aer Lingus through the crisis. But the Minister for Finance, Mr McCreevy, has refused to countenance the idea saying the Government would have to adhere to EU’s rules on state subsidies.
Yesterday, Ryanair Chief Executive Mr Michael O'Leary accused rival airlines of begging for state aid instead of cutting fares.