This week’s featured link:
Alitalia set for €400mn gov’t bailout after talks collapse – ch-aviation
Nobody wants to rescue Alitalia, so the burden has now fallen back on to the government. That sound you hear is another 400 million euros going down the drain at the Worst Airline Ever.
Two for the road:
Crisis-hit Hong Kong Airlines expecting substantial amount of money pumped for its survival by Saturday, CEO Sun Jianfeng says – South China Morning Post
Hong Kong Airlines is in such bad shape, it couldn’t pay the bills for inflight entertainment… or pay its people. But it looks like money is on the way to save it before a Saturday deadline. Maybe.
South Africa Waives Control of State Airline to Try Save It – Bloomberg
The South African government is throwing about $140 million into the airline, and then it is stepping back to see if an administrator can fix the airline. Seems like an interesting effort, but this airline isn’t likely salvageable. That being said, the government will probably find a way to prop it up for years to come.
The problem with the government bail-out efforts is that there has to be hope for what comes out on the other side. In the case of all three struggling airlines, what’s coming out on the other side is no better, no more reformed or has no more potential for profit than what’s going in.
It’s akin to our government bailing out Eastern Airlines in the early 1990s. It makes no sense and served no economic purpose. In each contemporary case, the governments would be better served by allowing the airlines to fail and then creating a new enterprise from the ashes, if necessary.
Funny how the EU rules on state aid do not apply to Italy. This airline dumpster would have been gone long ago had the Italian government not injected capital in the form of “loans” into AZ. Would love to know how much of these loans have been repaid?
The subsidies/loans to Alitalia are illegal under EU law. The EU hasn’t enforced them because of politics and pressure from the Italian government. There’s a lot of anti EU rhetoric in Italy right now (it’s not just the UK) and pulling the plug on their beloved airline won’t go down well.
Thai Airways may soon be another airline to add to the bailout list… (https://www.bangkokpost.com/business/1795234/thai-boss-insists-big-losses-normal or other sources). It has been reorganizing and getting bailed out numerous times over the past 15 years but nobody seems too bothered that it’s always losing money.
Thai is in financial doo doo but I don’t see them going anywhere. The new King of Thailand, for all his faults, is an aviation geek and certified 737 pilot with his certification maintained through Thai (presumably Thai Smile as they fly 737s). I flew them two weeks ago HKG-BKK and across the aisle was the King’s sister (Princess Ubol Ratana). Apparently she likes her jaunts to Hong Kong and who’s going to fly her there and back, and fawn over her as that cabin crew did, if TG goes under?
Oh of course they aren’t going to disappear, which makes a bailout all the more certain.
The question is if more routes or any other big expenses will get cut in the process. It would be silly to cut service to places that VIPs want to travel if it means you don’t get a bailout from them the next time you need it in a few years.
And another one. Air India.
The Indian government is moving for a second attempt at privatization. And a minister has indicated they may shut the airline down if no buyer is found. Meanwhile they’ve just posted massive losses yet again.
Your “Airlines We Lost” list for 2019 is already massively long. And it looks a good few are lining themselves up for the 2020 list.