Getting out of the dive: will airline companies be able to survive till 2024. Part 2

Getting out of the dive: will airline companies be able to survive till 2024. Part 2

Incredible in this situation was not the fact that airline companies faced problems but that industry in principle hasn’t turned to bag and wallet. The wave of mass bankruptcy hasn’t taken place: major part of big companies in aviation industry continued to work.

Of course, there were cases insolvency events. The most notable case was Colombian carrier Avianca (second biggest in Latin America) that continued flights despite restructuring, Britain regional airline company Flybe (after merging it resumed flights) and the biggest Indian low-cost company Air Deccan. Totally quitted about dozen companies – a lot, but not a fantastic number taking into account all circumstances.

The worst was managed to be avoided first of all thanks to active state assistance. Totally corporations received about 170 billion USD from state budgets that became in the nick of time. However, this money could be not enough. At the beginning of 2021 the head of IATA Alexander de Juniac (former CEO of Air France-KLM) told that airline companies need 80 billion USD more. And this amount hasn’t considered traffic reduction due to new lock downs and other restrictions. American Airlines in 2020 borrowed about 3.7 billion USD for its slots in the airports and own brand. Delta in April of the previous year took the credit in amount of 5 billion USD using as pledge slots in the New York airports and London airport Heathrow. But founder of Virgin Atlantic Richard Branson took loan for the company in amount of 500 million pounds sterling upon property of his own island in Caribbean sea.

In a word, the most difficult year in the history (at least the newest) companies managed to endure somehow. Farther on uncertainty: first months of 2021 showed growth of the travels almost by one fourth in the annual quantities but this cannot be compared even closely with disastrous fall of the previous year. Almost one third of losses was won back. According to IATA forecast the market of air transport will not restore to before-crises levels through to 2021 – and this is on the background that world economy will win back losses the next year already. Airline companies without doubt will be the most effected by pandemic industry.

Inability to serve new articles of expenditure such as paying salaries, expenses on fuel, lease payments and airport services at the account of own or borrowed funds may drive from the market players financial position of which was unstable even before pandemic.