EU finance ministers have ruled out giving state subsidies to loss-making European airlines - the airline industry worldwide has been badly affected in the wake of the attacks on New York and Washington. The US government has pledged up to $16 million in cash and guarantees for its airline industry.
But at an informal meeting of the Economic and Finance minister of the EU in Liege, the ministers ruled out general state aids to unprofitable companies. The ministers did agree on a short term emergency measure to allow state subsidies for third party war risk insurance premiums, which have been dramatically increased in the wake of the attacks on America.
Some European airlines have been faced with premium increases of up to 1500%, and airlines such as KLM and Sabena said they would have to ground their fleets from Monday night without state assistance.
A one month scheme of state organised insurance cover was agreed as the best way out of the current situation, giving time for the airlines, governments and the insurance industry to work on a longer term solution.
However, loss making companies such as Aer Lingus, Belgium's Sabena and Greece's Olympic Airways received no comfort from the ministers, who insisted that EU rules that effectively ban state subsidies must be respected.
Aer Lingus had received European Commission approval for an injection of public funds in the mid 1990s, intended as a one off, final public subsidy ahead of privatisation. The privatisation programme failed, and in the light of the enormous losses faced by the airline industry worldwide is now effectively unsaleable.
Calls for public subsidies for Aer Lingus by aviation unions in Ireland were sidestepped by the Minister for Finance Charlie McCreevy, who said the Government would have to abide by EU rules on state aid.
He said the airline's situation was being reviewed by the Minister for Public Enterprise, Mary O'Rourke, who is to produce a report on the airline's future.
