The price of oil and bankruptcies, the other threats to airlines

The price of oil and bankruptcies, the other threats to airlines

Although there are more companies that close, Europe accumulates half of the insolvencies in the sector and is at special risk to the 'low cost'

In case the effects of the 'brexit' were not enough - to the shareholder problem of IAG, joins the need of Ryanair and Easyjet to achieve that more than 50% of its social capital is really European, and even Air France will have to clarify its structure with the American Delta Airlines (9%) as second partner-, the air transport sector can experience a 2019 moved by a new increase in the price of oil , which in turn would worsen the risk of bankruptcies .

And is that the business of the airlines , numbers in hand, is now more dynamic than it may seem. In 2017 -of last year there is no official data yet, although it is presumed a similar evolution- three times as many companies started their business, of which they finished it, 81 against 26. Thus, a new one was opened only every five days, but another one was closed on average every two weeks.

And it is not only about small companies, since almost six out of ten (58%) of the openings corresponded to regular airlines , while more than a quarter (27%) were charter flight companies, which he sympathizes with the growth of business travel .

On the side of the streams, Alitalia was the most significant case and it has been under bankruptcy for two years because it did not reach a pact with its creditors. The Italian populist executive does not want to sell its flag airline to foreign companies, especially if they are from outside the EU. But there are still no formal offers -Air France-KLM and Lufthansa have only shown interest- for a company that does not generate profits since 2002.

Norwegian, threatened
However, the biggest economic problems in recent years have focused on the 'low cost' segment , where the weakest operators have paid the fierce price war. First Air, Cobalt, Small Planet and Air Azur were some of its victims in 2018. Unknown to most is not, however, Norwegian , intended by IAG for a long time.

The resignation of the latter at the end of January to launch a takeover bid to control the Norwegian airline, a competitor of the British operators that reign in the low cost segment, has overshadowed its financial future. In 2018 it multiplied by five its losses to 150 million euros, despite the fact that it increased its turnover by 30%, a trend of this subsector: _gana customers but gets too much debt with new planes and fuel .

In Spain, it will close three of its eight bases to save costs and face a strike. It will also review its appliances to improve efficiency, as the price of oil has started the year up and there is a lot of volatility in its price. And that, in a Europe that concentrates half of the insolvencies of airlines -also 40% of the openings-, is something worrisome.