Bankruptcy, Massive Sack Hit Airlines Across the World as COVID-19 Strikes at the Aviation Industry

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SWITZERLAND, MAY 25 – The Coronavirus seems to have finally dealt a much awaited massive blow to the world’s Aviation industry as several airlines go bankrupt across the world and many others carry out a mass retrenchment of workers.

The COVID-19 pandemic has hit the aviation industry with an unprecedented ferocity as air travel becomes reduced to the barest minimum, leading to low patronage for the past three months. The worst hit are the international airlines carrying passengers from one country to another. With the aviation industry in turmoil, Today’s Echo gathers that many airlines have laid off thousands of workers, a development that has further highlighted the tragic consequences of the COVID-19 Pandemic.

In this report, Today’s Echo examines some of the airlines severely affected in this tragedy.

Thai Airways

Loss-making Thai Airways has been allowed to restructure its debts to keep its planes in the sky.

The struggling airline had previously asked for a government bail-out via a 58.1bn baht ($1.81bn, £1.48bn) loan.

Instead, Thai officials told the airline to come up with a restructuring plan to avoid going bankrupt.

Thai Airways was under financial pressure even before the coronavirus outbreak caused passenger numbers to plummet. In 2019, it reported losses of 12bn baht.

But it has strongly denied rumours that it was looking to file for bankruptcy. In a statement on its website, Thai Airways said: “it has no intention to file for bankruptcy, responding to rumours appeared in the news and online”.

Avianca Airlines(Columbia)

Colombia’s national airline, Avianca, has filed for bankruptcy protection in a US court.

The carrier is the second-largest in Latin America, but its passenger operations have been grounded since March because of coronavirus.

It said the pandemic had cut more than 80% of its income, and it was struggling with high fixed costs.

If it fails to come out of bankruptcy, Avianca will be the first major airline to go under amid the pandemic.

In a statement, the firm said it had filed for Chapter 11 bankruptcy protection in a court in New York. The process postpones a US company’s obligations to its creditors, giving it time to reorganise its debts or sell parts of the business.

Chief executive Anko van der Werff said the move was needed to ensure the New York-listed airline emerge as a “better, more efficient airline that operates for many more years”.

More than 140 of its aircraft have been grounded since Colombian President Ivan Duque closed the country’s airspace in March. Most of its 20,000 employees have been put on unpaid leave.

Ryanair(USA)

US-based Ryanair has said it expects passenger numbers to halve in the current financial year as the coronavirus crisis continues to blight air travel.

The airline said it expected numbers to fall below 80 million, down from its original target of 154 million.

But it said it would weather the pandemic and emerge stronger.

Chief executive Michael O’Leary said Ryanair still planned to ramp up flights in July and said UK government quarantine plans were “idiotic”.

The prediction of lower passenger numbers came as Ryanair announced profits of just over €1bn (£894m) for the financial year to the end of March.

The airline’s profit was 13% up on the previous year’s figure of €885m.

Ryanair is set to cut 3,000 jobs – 15% of its workforce – as it restructures to cope with the coronavirus crisis.

Virgin Australia

Last Month, Virgin Australia confirmed it has entered voluntary administration – making it Australia’s first big corporate casualty of the coronavirus pandemic.

The country’s second-largest carrier cut almost all flights last month following wide-spread travel bans.

It was already struggling with a long-term A$5bn (£2.55bn; $3.17bn) debt.

The airline is now seeking new buyers and investors, after failing to get a loan from Australia’s government.

Virgin Australia chief executive Paul Scurrah said: “Our decision today is about securing the future of the Virgin Australia Group and emerging on the other side of the Covid-19 crisis.

“Australia needs a second airline and we are determined to keep flying.”

Meanwhile, Sir Richard Branson – whose Virgin group is a part-owner of Virgin Australia – has offered a Caribbean island as collateral to help get a UK government bailout of Virgin Atlantic.

Air Mauritius

Air Mauritius entered into voluntary adminstration last month, following “a complete erosion of the Company’s revenue base” as a result of the ongoing coronavirus pandemic.

The airline had already begun a transformation programme earlier this year to address “financial difficulties”, but global travel restrictions and plummeting demand caused by Covid-19 have exacerbated the issues faced by the carrier.

South African Airways

State-owned SAA has been fighting for its survival since entering a form of bankruptcy protection in December, with its fortunes deteriorating further when the COVID-19 pandemic forced it to halt all commercial passenger flights and the government refused to provide further funding for turnaround efforts.

The administrators seeking to rescue SAA had said on Sunday that unions must agree severance terms by May 8 or a layoff agreement would be offered to all staff. Staff would then have until the end of May 11 to accept severence terms or the airline could start laying off its roughly 5,000 employees.

Efforts by the National Union of Metalworkers of South Africa (NUMSA) and South African Cabin Crew Association (SACCA) to block the job cuts through the Labour Court were opposed in court by the administrators on Thursday and the judge said he would deliver a judgment as soon as practicable.

“In according the appropriate respect to the court and to ensure that our decisions are appropriate, we have decided to suspend the time lines as communicated in our letter and communication dated 3 May 2020, until the court’s ruling has been handed down,” the administrators said in an email sent to SAA staff.

LGW (Germany)

The regional German airline LGW, owned by the Berlin-based Zeitfracht company, last month filed for bankruptcy owing to the coronavirus crisis.

“The insolvency is a direct consequence of the travel restrictions and the general economic situation during the coronavirus pandemic,” a spokesman said of the filing at Dusseldorf’s district court.

LGW, which comprises 15 aircraft and 354 employees, of late had exclusively operated with its own crews on behalf of Lufthansa subsidiary Eurowings.

However, that lease agreement was terminated during the crisis.

LGW had found it impossible to obtain new orders, but the airline will continue to look for them under its own administration, intending to keep the option open for employees to be involved when air traffic picks up again.

LGW employees had been sent into short-time work even before the insolvency, without additional payments. According to the unions, the payment will continue despite the insolvency. A spokesman for the pilots’ union Vereinigung Cockpit explained that they are now seeking talks with management.

Fiji Airways

Fiji Airways has fired more than half its workforce as travel restrictions and lockdowns around the world have put the islands’ vital tourism sector in a deep freeze and reduced the national carrier’s revenue to “virtually zero”.

Chief executive Andre Viljoen said that after “exhausting all other options” the airline had decided to let 758 staff go — some 51 percent of the workforce — while those remaining would face a permanent pay cut of 20 percent.

“The sad reality of prolonged flight suspensions means that we simply do not have work for a large segment of our workforce now,” the airline said in a statement.

“The airline will receive virtually zero revenue in the coming months.”

Fiji Airways depends heavily on the tourist trade, particularly from neighbouring Australia and New Zealand, but has seen virtually all flights suspended.

Talks are currently underway to create a “travel bubble” among South Pacific nations that have coronavirus under control, allowing some tourism to resume.

But details are still being worked out and implementation could be many months away.

Both Australia and New Zealand have stringent restrictions on overseas travel and impose a two-week quarantine on all international arrivals.

Fiji Airways staff had already agreed to a pay cut of up to 35 percent before the jobcuts.

Those who still have jobs will also face a permanent pay cut of 20 percent, the airline added.

Fiji has reported just 18 cases of COVID-19, with no deaths and no new cases reported in more than a month

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