WW "airlines to go bust"

Old Jul 9, 2020, 2:30 am
  #1321  
 
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Originally Posted by Yellowbelly
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
My good friend in KL tells me

: " 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.
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Old Jul 9, 2020, 2:52 am
  #1322  
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Originally Posted by 13901
itinerant
Great word!
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Old Jul 9, 2020, 3:14 am
  #1323  
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Originally Posted by 13901
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...
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.
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Old Jul 9, 2020, 3:45 am
  #1324  
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Originally Posted by Stuttgart21
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.
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.
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Old Jul 9, 2020, 4:00 am
  #1325  
 
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Originally Posted by DFB_london
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.
In fact, with fuel prices where they are today, the new generation of aircraft is probably a negative thing for LCCs, as their ownership costs are very high and the fuel benefit vs an old aircraft is low. The exception to this going forward may be the long range narrowbody aircraft (like the A320XLR), but that's relatively new technology and can only cover distances such as Europe - East Coast US
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Old Jul 9, 2020, 5:27 am
  #1326  
 
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Originally Posted by Stuttgart21
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.
Norwegian uses state-of-the-art 787s, but their results tanked as soon as they started doing long haul heavily; I'd seen some data (from Cirium or RDC, but unfortunately I can't find the slides anymore) showing some massive losses out of LGW for last year/2018. As for Asia, I'd caveat that a lot of the routes served by the likes of Air Asia or Scoot aren't exactly long-haul, and where they do long haul... it hasn't worked well (Air Asia X tried the long-haul market if memory serves me right, and it didn't go well; Scoot had a rickety profit margin in the region of 1-3% for a while. And as for pricing... Alex - multiple times, in public fora as well as employee sessions - said that the "new" B777s, with 3-4-3 and fully depreciated, had a per-seat operating cost on par or even lower than Norwegian at Gatters, and data seem to suggest that the revenues are actually higher.

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.
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Old Jul 9, 2020, 6:49 am
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Originally Posted by jonas123
The exception to this going forward may be the long range narrowbody aircraft (like the A320XLR), but that's relatively new technology and can only cover distances such as Europe - East Coast US
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.
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Old Aug 4, 2020, 4:50 pm
  #1328  
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News on Virgin Atlantic filing for Chapter 15 bankruptcy

https://www.businessinsider.com/virg...20-8?r=US&IR=T

Last edited by mikeyfly; Aug 4, 2020 at 4:56 pm
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Old Aug 29, 2020, 9:10 am
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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
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Old Aug 29, 2020, 9:42 am
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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
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Old Aug 29, 2020, 9:49 am
  #1331  
 
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Originally Posted by steview111
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)
Lol

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.
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Old Aug 29, 2020, 10:10 am
  #1332  
 
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Originally Posted by krispy84
Lol

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.
Lol

Time will tell.
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Old Aug 29, 2020, 10:21 am
  #1333  
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Originally Posted by steview111
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
If you read the results recently from IAG you would know that wasn't remotely true.

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.
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Old Aug 29, 2020, 3:35 pm
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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.
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Old Aug 29, 2020, 3:50 pm
  #1335  
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Originally Posted by steview111
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.
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.
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