While all airlines have been heavily impacted by the coronavirus lockdowns, some have taken especially heavy hits, or were on the verge and are being pushed over.
Each has its own story, but what they have in common just now is that for one reason or another they have lost access to capital and loan markets. Among the most prominent at the moment are Norwegian, South African Airways, Virgin Atlantic and Virgin Australia.
The latter two share common ownership, headed by Richard Branson’s Virgin Group, which includes a number of other Virgin-branded enterprises including space exploration and a new cruise line. Australia has turned down Branson’s request for a bailout of nearly US$900 miilion, and the airline is expected to enter bankruptcy and possible liquidation.
Australian authorities noted that the airline has little Australian ownership and did not accept Branson’s argument that the airline is essential to the economy and to maintaining competition. British authorities, noting that Virgin Atlantic has lost money for two years and has not paid British taxes in fourteen, took a similar hard line on his request for a bit more than US$620 million. Branson is attempting to raise cash by mortgaging or selling his private Caribbean island.
Norwegian, whose rapid expansion from a Scandinavian discount carrier to a leading international discounter was so rapid that it consumed extraordinary amounts of capital before showing any profit, has been slimming down and shedding costs and aircraft for a year. It has now closed down the Swedish and Danish subsidiaries that are the employers of the airline’s pilots and crew and placed them in bankruptcy, an action that may have rolling effects on the rest of the company’s pyramid.
The airline blamed governments for not providing enough aid. It also canceled contracts with staffing affiliates in Spain, UK, Finland and the U.S. So far, it is holding onto Norwegian, French and Italian crew bases.
State-owned South African Airways is likely has the worst prospects of all. Owned by the South African government, it has not made a profit since 2011 and has been in a form of bankruptcy since last December. Last week, the Minister of Public Enterprises said the costs of fighting the Covid-19 pandemic meant that there was no more money available to bail out the airline, and plans have been made to lay off its entire workforce and begin liquidating assets.
It’s not people like Branson I feel sorry for, but the thousands of employees of these companies who will lose their jobs at a time when other prospects of employment are not on the horizon.