Will airlines go bust?
The coronavirus has been a catastrophe for airlines and their employees. Most airlines have grounded their entire fleet. Those airlines that are flying, only have a tiny number of flights. All airlines are haemorrhaging money and cutting staff. British Airways announced that they would cut over one quarter of their global workforce.
The majority of airlines worldwide are now insolvent. In another industry, these companies would be allowed to go bankrupt. However, Governments won’t let this happen. History has shown that Governments will always step in to save airlines. Events like 9/11 and the great Recession had a devastating effect on the airline industry. However, airlines survived and thrived again, thanks to Government bailouts.
Virgin Australia is the 2nd biggest airline in Australia, and they filed for bankruptcy due to the coronavirus. They’ve now been bought by Bain capital, and will continue to fly.
When we come out of this crisis, I expect that many airlines will be nationalised and state owned. This will be similar to the great recession in 2007, when Governments nationalised banks.