WW "airlines to go bust"
#1321
Join Date: Oct 2017
Location: GLA/EDI
Programs: BAEC Gold life/ GGL and U2 plus
Posts: 92
The future of Asia's biggest budget airline, AirAsia, is in “significant doubt”, auditor Ernst & Young has said.
Link to BBC: https://www.bbc.co.uk/news/business-53331387
Link to BBC: https://www.bbc.co.uk/news/business-53331387
: " It is very challenging time for airlines and travelling industries . SK Group ( South Korea ) has bought 10% of Air Asia last month and Malaysia Government is going to pump in M$500 million into AA and another 500 million into MAS . AA is rumoured to call for Right issues . AA price is about 10 pence from peak 60 pence ,"
So the in-flight noodle soup may have to be watered down a bit.
#1323
Suspended
Join Date: Mar 2020
Posts: 122
bringing in Iberia Express, Vueling, Aer Lingus or my uncle's trucking company it won't make a difference if the business model is fundamentally flawed. And, for whatever my opinion's worth, it is flawed. There's a reason why neither Ryanair nor Southwest ever ventured in the long haul low cost...
Serious players either already entered the market (e.g., WestJet or SQ subsidiary Scoot ) or are about to enter (e.g., Jetblue, AirAsiaX).
Even an airline such as Norwegian you cannot discount completely. In Europe, they have been battled very heavily on price by the network carriers. But when more LCC enter the long-haul market, it will not be feasible for the legacies to be as aggressive on pricing.
Finally, and without getting into details, there's an argument to me made that corona is somewhat favorable for LCC and somewhat unfavorable for legacy carriers.
#1324
Suspended
Join Date: Jan 2005
Location: London
Programs: plenty - ggl, ccr, etc, etc.
Posts: 1,704
The past is the past. New aircraft have changed the economic viability of low-cost on the long haul.
Serious players either already entered the market (e.g., WestJet or SQ subsidiary Scoot ) or are about to enter (e.g., Jetblue, AirAsiaX).
Even an airline such as Norwegian you cannot discount completely. In Europe, they have been battled very heavily on price by the network carriers. But when more LCC enter the long-haul market, it will not be feasible for the legacies to be as aggressive on pricing.
Finally, and without getting into details, there's an argument to me made that corona is somewhat favorable for LCC and somewhat unfavorable for legacy carriers.
Serious players either already entered the market (e.g., WestJet or SQ subsidiary Scoot ) or are about to enter (e.g., Jetblue, AirAsiaX).
Even an airline such as Norwegian you cannot discount completely. In Europe, they have been battled very heavily on price by the network carriers. But when more LCC enter the long-haul market, it will not be feasible for the legacies to be as aggressive on pricing.
Finally, and without getting into details, there's an argument to me made that corona is somewhat favorable for LCC and somewhat unfavorable for legacy carriers.
All airlines now face a problem that the economy is shot to pieces, and with lower wealth, higher taxes to come (politicians lie on this) and more unemployed it’s going to be a smaller more price sensitive market. That hits LCCs as hard and maybe even harder. Survival and success will be more about balance sheet strength- whether fortress like cash at Ryanair or state supported like Lufthansa.
#1325
Join Date: Jul 2012
Location: London
Posts: 489
That argument fails as legacy airlines have the same next generation aircraft too. Very few examples you mention are a financial success - maybe JetBlue on transcon, but that’s due to Mint - a lower cost premium product. Scoot generates losses, WestJet was such a mess it ended up being rescued by takeover, Air Asia X has struggled to ever make money. The only other arguable success might be JetStar - but as part of a monopolist group then it ought to be.
All airlines now face a problem that the economy is shot to pieces, and with lower wealth, higher taxes to come (politicians lie on this) and more unemployed it’s going to be a smaller more price sensitive market. That hits LCCs as hard and maybe even harder. Survival and success will be more about balance sheet strength- whether fortress like cash at Ryanair or state supported like Lufthansa.
All airlines now face a problem that the economy is shot to pieces, and with lower wealth, higher taxes to come (politicians lie on this) and more unemployed it’s going to be a smaller more price sensitive market. That hits LCCs as hard and maybe even harder. Survival and success will be more about balance sheet strength- whether fortress like cash at Ryanair or state supported like Lufthansa.
#1326
Join Date: May 2014
Posts: 7,237
The past is the past. New aircraft have changed the economic viability of low-cost on the long haul.
Serious players either already entered the market (e.g., WestJet or SQ subsidiary Scoot ) or are about to enter (e.g., Jetblue, AirAsiaX).
Even an airline such as Norwegian you cannot discount completely. In Europe, they have been battled very heavily on price by the network carriers. But when more LCC enter the long-haul market, it will not be feasible for the legacies to be as aggressive on pricing.
Finally, and without getting into details, there's an argument to me made that corona is somewhat favorable for LCC and somewhat unfavorable for legacy carriers.
Serious players either already entered the market (e.g., WestJet or SQ subsidiary Scoot ) or are about to enter (e.g., Jetblue, AirAsiaX).
Even an airline such as Norwegian you cannot discount completely. In Europe, they have been battled very heavily on price by the network carriers. But when more LCC enter the long-haul market, it will not be feasible for the legacies to be as aggressive on pricing.
Finally, and without getting into details, there's an argument to me made that corona is somewhat favorable for LCC and somewhat unfavorable for legacy carriers.
All things considered, I personally think that the point still stands: on long-haul, at least in Europe, the nature of the operation is such that the main traditional advantages of an LCC over a legacy (fast turnarounds, no night stops, multiple frequencies, little local infrastructure) are nullified. Which (also) explains why you don't make the same margins on long haul LCC as you do on SH.
#1327
Join Date: Nov 2017
Posts: 3,061
The LR is the one restricted to east coast flights. The XLR (not yet flying commercially) will be able to go significantly further - Airbus sells it as being able to operate Europe to western Canada and as far south as Arizona. A step-change in airline operations.
#1328
FlyerTalk Evangelist
Join Date: May 2014
Location: UK
Programs: BA Gold
Posts: 12,256
News on Virgin Atlantic filing for Chapter 15 bankruptcy
https://www.businessinsider.com/virg...20-8?r=US&IR=T
https://www.businessinsider.com/virg...20-8?r=US&IR=T
Last edited by mikeyfly; Aug 4, 2020 at 3:56 pm
#1329
Join Date: Apr 2012
Location: LON
Programs: Mucci, BAEC, Eurostar
Posts: 3,292
Report on OMAAT saying that Norwegian aren't in a very good position cash-wise and may default in Q1 (quelle surprise!)
https://onemileatatime.com/norwegian...-out-of-money/
Original WSJ article, but paywalled: https://www.wsj.com/articles/norwegi...ts-11598621057
https://onemileatatime.com/norwegian...-out-of-money/
Original WSJ article, but paywalled: https://www.wsj.com/articles/norwegi...ts-11598621057
#1330
Join Date: Dec 2017
Posts: 209
Aside from the fact that “one mile at a time” is just a blog and an opinion, I’d say at this stage BA are far closer to going bust than Norwegian.
Norway has deep pockets and has already given bailouts to its airlines. 10% of their original shareholding is/was the Norwegian sovereign fund.
BA refuse to even ask for government help in a typical move designed at preventing weaker competitors (Virgin) getting help. BA are haemorrhaging cash and p*ssing off customers (and staff) in equal measure. They won’t have any customers left by next year the way they are going (see cancellation threads, End of Mid haul thread, 747 retirement thread, etc etc)
If Norwegian were going to go bust it would’ve happened four years ago, three years ago, two years ago and certainly in March of this year. Their financial reorganisation was based on a restart in March 2021, so they’re not any worse off than anticipated if they don’t start a more meaningful schedule before then. Norwegian’s Gatwick crew are still furloughed and receiving August pay this week, despite the fact the company now have to contribute
Norway has deep pockets and has already given bailouts to its airlines. 10% of their original shareholding is/was the Norwegian sovereign fund.
BA refuse to even ask for government help in a typical move designed at preventing weaker competitors (Virgin) getting help. BA are haemorrhaging cash and p*ssing off customers (and staff) in equal measure. They won’t have any customers left by next year the way they are going (see cancellation threads, End of Mid haul thread, 747 retirement thread, etc etc)
If Norwegian were going to go bust it would’ve happened four years ago, three years ago, two years ago and certainly in March of this year. Their financial reorganisation was based on a restart in March 2021, so they’re not any worse off than anticipated if they don’t start a more meaningful schedule before then. Norwegian’s Gatwick crew are still furloughed and receiving August pay this week, despite the fact the company now have to contribute
#1331
Join Date: Jul 2014
Location: UK - Hampshire & London
Programs: Mucci de Guardian des Celliers des Grands Crus 1e Classé, plus BAEC.
Posts: 2,734
None of the points you mention at the end of the above will have any impact on BA’s success or otherwise. FT is a thimble in the swimming pool of the aviation world.
#1333
Ambassador, British Airways; FlyerTalk Posting Legend
Join Date: Apr 2012
Location: Leeds, UK
Programs: BA GGL/CCR, GfL, HH Diamond
Posts: 42,958
Aside from the fact that “one mile at a time” is just a blog and an opinion, I’d say at this stage BA are far closer to going bust than Norwegian.
Norway has deep pockets and has already given bailouts to its airlines. 10% of their original shareholding is/was the Norwegian sovereign fund.
BA refuse to even ask for government help in a typical move designed at preventing weaker competitors (Virgin) getting help. BA are haemorrhaging cash and p*ssing off customers (and staff) in equal measure. They won’t have any customers left by next year the way they are going (see cancellation threads, End of Mid haul thread, 747 retirement thread, etc etc)
If Norwegian were going to go bust it would’ve happened four years ago, three years ago, two years ago and certainly in March of this year. Their financial reorganisation was based on a restart in March 2021, so they’re not any worse off than anticipated if they don’t start a more meaningful schedule before then. Norwegian’s Gatwick crew are still furloughed and receiving August pay this week, despite the fact the company now have to contribute
Norway has deep pockets and has already given bailouts to its airlines. 10% of their original shareholding is/was the Norwegian sovereign fund.
BA refuse to even ask for government help in a typical move designed at preventing weaker competitors (Virgin) getting help. BA are haemorrhaging cash and p*ssing off customers (and staff) in equal measure. They won’t have any customers left by next year the way they are going (see cancellation threads, End of Mid haul thread, 747 retirement thread, etc etc)
If Norwegian were going to go bust it would’ve happened four years ago, three years ago, two years ago and certainly in March of this year. Their financial reorganisation was based on a restart in March 2021, so they’re not any worse off than anticipated if they don’t start a more meaningful schedule before then. Norwegian’s Gatwick crew are still furloughed and receiving August pay this week, despite the fact the company now have to contribute
Virgin wasn't prevented from getting help, they were told to try and get a private sector solution before coming to government with the begging bowl straight away, lo and behold a private sector solution was possible.
I agree, the bailouts from government is now Norwegian's lifeline without which it would have gone already.
#1334
Join Date: Dec 2017
Posts: 209
I never said to the contrary with regards to Virgin. But BA were never going to go with the “begging bowl” as they knew any help for them would likely be also given to other companies, and BA knew their balance sheet was better than the competition.
Im not sure what you consider “not remotely true”. If the status quo were to continue for another year or more, BA are going to be struggling. Norwegian will more than likely get continued government support due to their importance on the Norwegian domestic routes.
Im not sure what you consider “not remotely true”. If the status quo were to continue for another year or more, BA are going to be struggling. Norwegian will more than likely get continued government support due to their importance on the Norwegian domestic routes.
#1335
Ambassador, British Airways; FlyerTalk Posting Legend
Join Date: Apr 2012
Location: Leeds, UK
Programs: BA GGL/CCR, GfL, HH Diamond
Posts: 42,958
If the status quo were to continue for another year all airlines would suffer - not to mention I think the world economy would be in a complete mess. IAG is in a better position than most to survive.