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Airlines handed £1.8 billion in emergency coronavirus loans

UK News | Published:

The Bank of England has lent to 53 businesses £16.25 billion to help them through the coronavirus crisis.

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The Bank of England has lent nearly £2 billion to some of Britain’s biggest airlines and paid £1 billion to a German chemicals giant as part of its emergency pandemic funding, it has been revealed.

Ryanair and easyJet have won loans of £600 million each, with BA owner IAG and Wizz Air both accessing £300 million, raising concerns from environmental campaigners who want the loans to come with strings attached.

The central bank revealed 53 businesses had borrowed a total of £16.25 billion under the scheme, as it published a full list of all borrowers on Thursday.

CITY Loans
(PA Graphics)

Other familiar names include Asos, Nissan, John Lewis, G4S and Tottenham Hotspur.

The north London football club is the only team to use the loan scheme and the move follows criticism earlier this year when bosses initially said they would be using the Government furlough scheme for non-playing staff.

Analysis from the High Pay Centre shows that chief executives of the 13 FTSE 100 and FTSE 250 companies on the list were paid a combined £36 million in total last year – an average of £2.8 million.

Rolls-Royce was revealed to have taken a £300 million loan from the Bank just a month after the engine maker said it was cutting at least 9,000 jobs.

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EasyJet
EasyJet has been loaned £600 million (Nick Ansell/PA)

Its annual report shows that chief executive Warren East was paid £3.2 million in total pay last year, including £2 million in annual bonus and long-term incentive scheme shares.

It raised questions from campaigners about what companies the authorities should be propping up, and what it should expect in return.

“Many of these companies have a poor record in terms of excessive executive pay at the top, poverty wages for their wider workforce and unsustainable environmental practices,” said Luke Hildyard at the High Pay Centre.

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He added: “It’s senseless for public bodies to prop up businesses without securing commitments to act in the public interest. If we want to build back better, with a more resilient economic model, a more united society and a more sustainable approach to the environment then bailouts and Government loans need to be deployed more thoughtfully.”

The biggest single loan, £1 billion, has gone to German company BASF – the world’s largest chemicals producer.

The chief executive of Rentokill, whose business has borrowed £600 million from the scheme, was handed £4.6 million in total pay last year. This included a £3.6 million annual bonus and share incentive.

The list also includes defence company Chemring and paint giant Akzo Nobel.

On Wednesday environmental group ClientEarth called on the Government not to back loans to companies without putting emissions criteria in place.

Greenpeace climate campaigner Fiona Nicholls said: “Airlines have been given exactly what the Chancellor, the Prime Minister, economists and the public said they should not be given – billions in cheap and easy loans to keep them polluting, without any commitments to reduce their emissions or even keep their workers on the payroll.

“Today we’ve learned that cruise lines, pesticides and car companies have received similar largesse. We should see a lot more public benefit from all this public money.”

ClientEarth chief executive James Thornton said: “It appears the peak of the virus has passed for now, but we simply cannot put on hold our response to climate change while we deal with the pandemic.

“On the contrary, the recovery allows the Government to kick-start the UK’s economy in a way which ensures long-term resilience and a more fair and just transition to a net zero economy.”

The Bank of England’s Covid Corporate Financing Facility (CCFF) was set up to help larger businesses with credit scores through the pandemic.

It complements three other loan support schemes, where the loans are provided by high street lenders, and guaranteed by the Government.

Even before the list was published, Dame Margaret Hodge, a Labour MP and former chair of the Public Accounts Committee, had called on the Government to publish even more data on other loan schemes.

She also said that the Government should not lend to companies who might not be paying their fair share of tax.

“While for many these schemes will be a financial lifeline, for unscrupulous corporations they will be viewed as easy pickings,” she wrote in a letter to chancellor Rishi Sunak.

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