Hit by pandemic, many airlines are on the brink of closing down

Tuesday, November 3, 2020

Having a home government with deep and open pockets is emerging as important in terms of whether an airline will survive in the face of corona virus pandemic.

Carriers in jurisdictions where there is less support from government are most likely to go out of business. Many airlines in current context are prone to financial strife.

In March, when the virus was just starting to spread beyond China into parts of Asia and Europe, rapidly closing international travel, the results show a clear swing to the West. At least four of the 10 airlines named back then have restructured in some way, and all but one were in Asia.

There are now more carriers in Africa and Latin America, which have already folded or entered administration. Representatives from Medview Airlines Plc, Precision Air Services Ltd., Grupo Aeromexico SAB and Gol Linhas Aereas Inteligentes SA didn’t immediately respond to queries.

AirAsia Group Bhd. and Azul SA declined to comment. Thai Airways International Pcl said that a restructuring plan will be proposed to the Central Bankruptcy Court by the end of the year, and that the company plans to fulfill its commitments to all creditors.

A spokesman for Pakistan International Airlines Corp. said that while the airline’s liabilities go beyond assets by around four times, “in reality it’s different because those liabilities are extended on sovereign guarantees and servicing is done through the government budget. In that sense, the situation isn’t as it shows. We’re comparatively doing okay.”

AirAsia X Bhd., which isAirAsia’s long-haul budget arm, is restructuring more than $15 billion of debt. However, the future of state-run Malaysia Airlines Bhd. remains unsure. The director of aviation development at the Malaysian Aviation Commission, Germal Singh, said that the government is unlikely to intervene and lend a hand.

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