Several Airlines are Bankrupt by Covid19
Airlines are Bankrupt by Covid19: The coronavirus and its spread throughout most of the world left the airline industry in ruins. Many airlines have stopped flying and some of them have already announced that they will not do so again or that they will drastically cut routes.
Among the companies that already reported it, the last ones were Latam, (Chilean) and Avianca (Colombian) that filed for bankruptcy in the United States. To do this, they filed for Chapter 11 bankruptcy in the Southern District of New York.
The companies announced that the decision or “voluntary request” was due to the unpredictable impact of the covid-19 pandemic.
More Airlines in Bankruptcy
Another of the most hit giants is IAG, with a 75% reduction in capacity in the next two months. In the company they warn that many European companies will not be able to survive and that they have probably already been brought into technical bankruptcy, or at least are considering their debt covenants.
United Airlines of the United States, IAG -matrix of British Airways, Aer Lingus and Iberia-, Air France-KLM, easyJet, Finnair, Air New Zealand and Aeroflot announced new actions to reduce costs after several countries closed their borders to commercial flights
The Oneworld, Skyteam and Star Alliance alliances also signed a joint statement urging governments to take measures to support the sector.
IATA, is the commercial body of the Areronautica industry that estimated that the industry would lose up to $ 113 billion in revenue as a result of the crisis. But that was before the growing international blockade.
Air France – KLM, on the other hand, announced that it will land its largest aircraft and cut services by up to 90% in the coming days in response to the coronavirus impact, causing a 16% drop in shares. . The airline said it had identified measures to save 200 million euros ($ 223 million) in 2020 and ways to cut its capital spending by 350 million euros.
United Airlines in the US and Air New Zealand have informed their staff that they will begin the dismissal processes, as travel restrictions force carriers to reduce their capacity and leave tens of thousands of planes grounded.
Air New Zealand also announced that it would reduce international capacity by 85% and reduce domestic capacity by almost a third in May and June. ANZ employs 8,000 people, already consulting unions about layoffs.
The Latam Case
The bankruptcy measure grants an automatic 180-day suspension of the execution of the unpaid debts, and according to what was stated in the statement, LATAM will use that time to renegotiate key contracts. adjusting them to current market conditions. Also, LATAM seeks to restructure its financial balance and adjust the size of its operations to the new reality.
The company announced that it obtained financing commitments from shareholders related to the Cueto and Amaro families, and Qatar Airways for US $ 900 million that will be made available once the agreements determined by the special administration are confirmed.
All the Aerolinas are analyzing their operations, although perhaps they do not say so. Today the priority is to survive in a context in which there is no demand for tickets and the market would only reach a certain normality, perhaps in two years. Most airlines, without contribution from the States, are bankrupt
The Lufthansa and Ryanair Cases
Lufthansa’s supervisory board on Wednesday refused to approve the € 9 billion aid it had negotiated with the German government, for fear of Brussels’ response, pressured among others by Ryanair. The company, which loses one million euros per hour, is at risk of bankruptcy.
At the end of the meeting in which aid was not approved, a spokesman said that “the European Commission seems to be imposing conditions on us for public aid, which we cannot accept.” The conditions, as it has been known, involves opening the Lufthansa hubs in Frankfurt and Munich, to which the company seems not to be willing. “With this information, the supervisory board has not dared to approve the stabilization package”, circumlocution to call the 9,000 million and the entry of the German state back into the capital.
The approved aid requires the German government to enter the capital, with 20 percent of the shares, expandable up to 25, with the ability to block the entry of hostile shareholders. Lufthansa also owns Eurowings in Germany, as well as other brands operating under its umbrella. Outside the country, Lufthansa is the owner of Brussels, Austrian and Swiss, the most important companies in Belgium, Austria and Switzerland. In all these countries it has also requested and obtained public aid.
Control of Frankfurt Airport
Lufthansa has a situation of almost absolute control of the Frankfurt airport and domain of Munich, although to a lesser extent. Apparently, the European Union would be willing to approve such aid if part of the operation is ceded at these airports, which could jeopardize Lufthansa’s business model.
Michael O’Leary, the CEO of the Ryanair group, which competes very strongly in Germany, has announced that he will file a lawsuit against Lufthansa considering that this aid is an alteration of equality to compete in the markets. Ryanair has not applied for aid in any country in which it operates.
Tourist Travel after Covid19
There are already surveys about what passengers would do after the pandemic. Insideflyer surveded to 27,451 frequent passengers on what they expect from travel. The results can be seen here in this specialized blog
Airlines are bankrupt by Covid19 – end