The recent crisis has left airlines wanting some rescue deals to make sure they can continue their operations. Many airlines have gone bankrupt and some are on the verge of bankruptcy. On the other hand, some airlines have filed a petition for rehabilitation and it’s not certain how much time would that take. In short, airlines need serious help from either governments or private investors or both to keep operating.
Recently, Virgin Atlantic got the court approval for recapitalization, but it’s not the first, a few airlines were also able to strike a deal that can ensure they stay airborne. Some airlines have asked creditors to help them re-organize while others have availed fresh capital either from the investors or the state. They have also reduced the costs of removing employees or from aircraft cuts.
This is the initial rescue phase and more help would be required by the airlines in the months to come. Even though air travel demand has increased after some countries allowed their citizen to travel abroad, many airlines still need future insurance. There is a hope that the travel recovery will be quick, but even then they need to plan what happens next.
If we talk about Norwegian that carried out lifeline structuring four months back, what they need after the first recovery phase is more funding. The chief executive of the airlines said on 28 August while releasing half-year results that we have enough capital for this year, but it’s very clear that if the crisis remains we would need more money.
As the crisis doesn’t seem to be ending, it appears that other airlines would also require more funding after some months, though; it’s not certain how many airlines would need further help. How much money they would need depends on how quickly the travel demand goes up.
We don’t have answers to these questions yet, in fact, the airlines themselves don’t know what the future would bring. A few countries were quick in providing financial aid to their airlines and it’s about time other countries also follow their footsteps.