As the COVID-19 continues to spread, the number of diagnoses worldwide continues to rise. Taiwan, despite gaining much praise for its successful response in fight against the virus, has seen its aviation industry hit hard as the majority of flights operated there are international.
In this regard, the Ministry of Transportation and Communications of Taiwan and the Small and Medium Business Credit Guarantee Fund of Taiwan have worked together to complete the world’s first aviation industry bailout financing loan. China Airlines, Eva Air with its affiliated companies, and STARLUX Airlines received an approval for a total of nearly NT$50 billion (US$1.67 billion) credit guarantee for financing loans.
After obtaining the credit guarantee, the airlines are able to sign a contract with the underwriting bank to obtain a financing loan. On the 24th of April, China Airlines and EVA Air reported having already signed contracts with Bank of Taiwan to receive relief loans of NT$20 billion (US$671.1 million) each, with a maturity of two years. The other airlines will follow to get financial support in May.
The government also has set strict rules on how the funds can be used. According to the rules, airlines can use the funds to cover operational expenses, such as staff salaries, terminal charges, fuel costs and leasing fees, but cannot spend any to repay old debt.
In addition to the funds using rules, the Small and Medium Business Credit Guarantee Fund of Taiwan also stated that there are some attached conditions to the loan in order to implement corporate social responsibility. China Airlines and Eva Air should propose a special plan to contribute back to the rural areas and the weak within 6 months after receiving the loan.