Travel Firms Owe $2.7 Billion Worth of UK Covid Loans

The UK government’s list of companies that have yet to pay back their emergency Covid loans provides a snapshot of how badly the travel industry has been affected by the pandemic.

The UK loaned a total of $50 billion to a range of companies as part of its Covid Corporate Financing Facility, set up by the Treasury and the Bank of England.

The cash was made available to any firms that make a material contribution to the UK economy, and was designed to help them bridge coronavirus disruption to their cashflow, through the purchase of short-term debt in the form of commercial paper, of up to one-year maturity.

The scheme closed at the end of March 2021, and six months later there is $4.6 billion outstanding — with travel firms headlining the list. Companies have until March next year to repay their loans. 

Current debts from three airlines alone total more than $1.6 billion, according to data published by the Bank of England. Ryanair owes $817 million, while easyJet and WizzAir each owe $408 million.

None of the companies are late in repaying the loans, the Bank of England confirmed to Skift. It was also unable to comment on when individual companies were required to repay their loans.

“We plan to repay the remainder of the Covid Corporate Financing Facility loan when it is due later this year,” a spokesperson for easyJet told Skift.

Flight Centre UK Limited has an outstanding debt of $156 million. Up until the beginning of March this year, the debt stood at $88 million. “Since the government announcements about the relaxation in travel rules and destinations the British public can travel to, Flight Centre has seen a doubling in turnover and is excited to see travel recovering. Flight Centre UK Ltd is due to repay the treasury backed CCFF loan in March 2022,” Adam Murray, Flight Centre’s European chief financial officer, told Skift.

“While our industry is still responding to high levels of uncertainty, the recovery is tracking with our internal projections and Flight Centre intends to meet its commitments under the terms of the CCFF loan in March 2022, when they fall due,” he added.

Gatwick Airport’s Covid loan stands at $374 million, while coach operator Stagecoach remains at $408 million.

Overall, 107 different companies between March 2020 and March 2021 took advantage of the scheme.

“As one of the industries that has been hardest hit by the pandemic, it is unsurprising that travel and related service providers have faced significant financial challenges. For many UK suppliers, it made prudent business sense to take advantage of the government’s Covid loans,” said Scott Davies, CEO of the UK’s Institute of Travel Management.

“However, it’s worth noting that corporates always carry out due diligence during the request for information and proposals process regarding a supplier’s financial stability — this has always been the case even before Covid. Our buyer members wouldn’t therefore single out any particular supplier in terms of being cautious about working with them. The buyer-supplier relationship is different for every corporate,” he added.