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How Can European Airlines Overcome the Risk of Covid’s Impact?

European Airlines

There can be no doubt that the coronavirus pandemic is a distinctly human crisis at its core, with more than 41.7 million cases recorded as of October 23rd and an estimated 1.14 million fatalities having arisen as a result of this.

However, it’s hard to dispute the fact that Covid-19 is also responsible for a deep socio-economic crisis, with some marketplaces having been more adversely affected than others within the global economy.

In this post, we’ll appraise the impact of coronavirus on aviation and European airlines, while asking what strategies brands can take to achieve success going forward.

How Has Covid-19 Impacted on the European Aviation Market?

In general terms, it’s hard to quantify the cumulative impact of coronavirus on the European aviation market, although some figures estimate total losses to be in the region of 82 billion Euros.

This represents an unprecedented level of loss within such a short period of time, while it should also be measured against the potential loss of up to seven million jobs within the European marketplace before the end of 2020.

In terms of specific companies, Austrian Airlines revealed that it had suffered particularly heavy losses back on August 20th, thanks to the border closures imposed internationally during the height of the pandemic.

These losses were estimated to be in the region of 100 million Euros during Q2 of this year alone, compared with the profit of 46 million Euros that was reported between April and June last year.

This represents a stark and worrying decline, and one that was precipitated by a decline of 94% in the total sales of airline seats to reach just 35 million Euros during the same period of time.

Not only are such figures of other leading European aviation brands, but they’re also representative of a widespread trend that shows no sign abating as a second wave of infections continues to spread globally.

How Can Airlines Survive and Thrive Post Coronavirus?

For now, airlines are focused studiously on survival in the near-term, with the consultancy brand RSM offering some generally sound advice suggesting that companies strive to “avoid the risk of failure”.

This is a crucial principle when dealing with any type of commercial or financial crisis, with tactics such as corporate restructuring offering a proactive way of adapting to unexpected change and extending the lifespan of any stricken business.

In simple terms, this process involves bringing objective and skilled professionals who have experience in helping distressed companies to transition from a state of crisis to survival, before they develop viable growth plans for the longer-term.

This can also lead into similarly effective and proactive decisions, including the short-term realignment of business plans and the reduction of operational and structural costs (ideally without impacting further on revenue and profitability).

Interestingly, this also makes provisions for debt restructuring and long-term liability management, as airlines look to reorganise their existing capital structure and renegotiate contracts or agreements with creditors.

With this type of comprehensive approach, airlines can hopefully survive the immediate fallout from Covid-19 and build towards sustained growth in the longer-term.

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