Airlines get EU okay for state help

LONDON - European states can bail out airlines struggling to bounce back from the no-fly zone earlier this month, Brussels said yesterday, as it warned the shutdown could cost more than £2 billion ($4.27 billion).

Relaxing strict rules banning state subsidies, European Transport Commissioner Siim Kallas indicated governments would be allowed to carry out a range of measures such as temporarily lifting rules on night flights, deferring air traffic control fees and providing soft loans.

However, he warned that the European commission's offer to turn a blind eye to state help should not be used as an excuse to prop up failing carriers or help them through immediate cashflow problems.

He said the Commission calculated the cost of the crisis this month, when air traffic controllers across Europe grounded flights for up to six days because of concerns that volcanic ash could damage jet engines.

The estimate covers all sectors of aviation including airlines, airports, tour operators and ground handlers hit by the cancellation of around 100,000 flights which stranded 10 million travellers.

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