Airlines has been hardly done by the current pandemic. From the start of 2020, mostly all the countries close down their borders along with its domestic traveling was also limited due to the novel Coronavirus outbreak. As a result, all the airlines have to cancel almost all flights to stop the spread of Coronavirus, this cause devastation in the airline industry globally.
Due to this, the international air industry has to go through a V-shaped decline in terms of capacity. According to the reports, the government has taken over the initial containment that affects the airline industry is near about 130 billion U.S dollar (loss of annual passenger revenue). Now, the loss has reached 314 U.S billion dollars. This leads to the aviation industry in a big mess. To be more precise, North America and Europe have an estimated revenue loss of 25 billion U.S dollars.
Table of Contents
Precise view of Aviation Industry
Virgin Australia
Virgin Australia had gone for the voluntary administration and want aid to overcome bankruptcy. Debt crises have been worsened due to the COVID-19 outbreak which has lead to the way of insolvency. The statement is forwarded by Virgin Australia airlines that they have assigned a Deloitte administrator so that they can buck up and emerge themselves with a strong financial body on another side of the COVID-19 outbreak.
Air Mauritius
The next big headline comes from Air Mauritius about their voluntary administration. This decision is taken because of the travel restrictions and closure of all borders due to the pandemic. This airline has been serving Mauritius for about 50 years. They have formed a committee “transformation steering committee” in January, it is formed to address all the financial implications and revise their business model.
South African Airlines
South African Airlines is undergoing the process of liquidation. A specialist has been appointed because they were running out of funds. South African Airlines has been fighting for survival since December. Their fortune decreases when all the commercial flights have to shut down due to the pandemic.
Finnair
Finnair is undergoing the major setback due to the Coronavirus pandemic. They have cut down their capacity by 90% along with the dividend. It is considered to be the “biggest Crisis in Aviation history”. Finnish Airline is going through a huge financial loss this year. Finnair Airlines has recently reported that the Finnish Government which contributes more than half of the shares of the airlines will support them actively.
Ryanair
Ryanair comes up with the prospect that for the next few months all the airlines will be grounded. Michael O’ Leary (Chief executive) has given the statement that we can reduce the capacity by 80% but a fully grounded fleet cannot work. Due to COVI-19, there has been a loss of huge revenue of $31.4 billion. Ryanair grounded 113 planes and as of now laid down 9000 pilots. There is an indication that 450 people will be slacked down in the upcoming months.
Norwegian Air Shuttle
Norwegian had taken a measured step to ground 40 percent of the long haul fleet and from the short-haul flights to about 25 percent until the end of May. Due to the coronavirus disaster, there is a drop-down in the passengers which results in a temporary layoff about 50 % of employees.
Going through the same vein, SAS has fired 520 pilots along with it returned 14 planes. The Scandinavian state is undergoing a study for the liquidation of SAS and Norwegian so that they can transform ashes into a new company.
Etihad
Etihad is as of now cancel 18 orders for A350, canceled all orders of Boeing 777x which is almost 150 aircraft (largest order), grounded 10 A380, and 10 Boeing 787. Along with it, 56 members will retire.
Wizzair
Now talking about Wizzair they have return 32 Airbus A320s including this 1200 people are laid off which include 200 pilots. Another wave off planned is 430 layoffs which will be executed in the coming months. The rest of the employees will get wages after a reduction of 30%.
IAG
IAG is a parent company of British Airways has also abandoned to takeover Air Europe and they are ready to pay compensation for it. IAG British Airways have grounded approximately 34 planes and IAG Iberia grounded 55 planes. CSA will keep the 5 medium-haul aircraft and will abolish all the long haul sector, Eurowings is on the stage of bankruptcy and fleet is reduced by 50% by Brussels Airline. People who are more than 58 years are going to retire.
Lufthansa
Lufthansa the German Mega carrier is planning to ground near about 72 aircraft, this process is going to take place in two installments. Hop is going through extensive study and research as they are thinking to reduce the fleet and cut off the staff by 50%.
From the reports, the news has been popped out that there are 60 aircraft are stored in the Airbus along with it there is no buyer to purchase these aircraft. So, there are maximum chances to cancel all the orders along with the 18A350s.
There were almost 8000 planes that were grounded till September according to Industry insiders. By taking an average of 5.8 per plane, it includes long Haul and medium. It would near about cover unemployed 90,000 pilots all over the world.
Airline industries require Life Support!!
There is a well-said quote that history doesn’t repeat- but it rhymes!!
The Middle Eastern Aviation services are collapsed completely due to a sudden decrease in passenger demand. Most of the carriers, the air travel market is zero-people who are canceling the flights are way more than the new bookings. But are you amazed at it, because I am not? It is the situation where the regional government has shut down the border so that no foreign visitor can come and quarantine imposed due to which all the outbound and inbound passenger flights are suspended.
Aviation Services- Cash Outflows
As sales are disappearing for the airlines due to which the cash inflows also drop down but all the companies need to pay the bills. The sad news is we have to pay the bills even if the revenue to pay the bills is gone.
Airlines are doing every bit to slow down their cash outflows. They are eliminating all the services, grounding the aircraft, and reduction in the salary. In this time of extreme downfall, there are reports that many of the airlines won’t be able to survive for a long time and will eventually shut down.
The economic damage is immense as it has dented the aviation services. All the employees and supply bases are affected by this damage. In the Middle East, aviation supports the economic activity for approximately $130 billion and it is equivalent to 4.4% of the GDP of the entire region. Additionally, employment is generated by 2.4 million people.
Apart from the Middle East, there are 65.5 million jobs that come under the aviation sector. IATA has predicted that airline has just two months of the cash at the start of the year. For the Middle East, the latest figures support that the books are down by 40% till March and April 2020 and 30% will be lower down till May and June 2020.
Urgent support measures are required. Globally, the aid to the aviation sector is required of $200 billion. It will include direct financial support which will help to compensate revenue from the tickets.
Aviation is known as “Business of Freedom” because it liberates us without any constraints of geography, time, and distance. Even in this worsening situation, they are providing much-needed help by transporting nurses and doctors from one place to another in no time so that they can provide medicine and testing kit to the people suffering from COVID-19.
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