Released today, a report by CAPA has compared the financial positions of key airlines and groups in Europe. The research found that low-cost carriers Wizz Air and Ryanair had the most liquidity, while beleaguered Norwegian had the least. Liquidity is increasingly important amid the current COVID-19 outbreak, as airlines rush into damage limitation.
Airline liquidity revealed by CAPA
A new report by the Center For Aviation (CAPA) has revealed which airlines are winning in the liquidity stakes in Europe. Right now, this is a big deal for airlines, as they struggle under the weight of the current coronavirus pandemic.
Dozens of airlines have grounded huge portions of their fleet, as nations close borders and impose restrictions on who can enter. Some are eyeing layoffs, as they scramble to minimize outgoings amid unprecedented loss of revenue.
Just earlier this week, we reported on the CAPA prediction that most airlines would indeed collapse by May, if governments don’t step in to help. Numerous airlines have called for state support, but as yet no country has put its hand in its pocket to help.
Now, we can get a peek into the situation in Europe, and which airlines are in a good position to weather the current storm.
Wizz and Ryanair leading
The CAPA report evaluates liquidity in airlines, based on the gross level of cash and cash equivalents as reported most recently. On this basis, the airlines that are most comfortably liquid are low-cost carriers Wizz Air and Ryanair.
Wizz Air is reported to have liquidity of 48% of 2019 revenue. That’s equivalent to operating for 176 days, almost six months’ worth of cash. Ryanair comes a very close second, with 47% of 2019 revenue. That’s the same as 170 days.
Other airlines ranked included Finnair, with 133 days of liquidity, IAG with 132 days and then easyJet with 113. Air France-KLM, Turkish and Lufthansa came in at 81, 66 and 51 days respectively. The Lufthansa Group is facing an overall capacity reduction of between 80% and 90%, and yesterday announced the complete suspension of operations of Austrian Airlines.
Drawing level with Lufthansa Group also with 51 days of liquidity was SAS. The airline has said that the demand for international air travel is just about non-existent, and as such has suspended almost all its flights from today. It’s eyeing layoffs of around 10,000 people, making up 90% of its workforce, although it’s said these are temporary measures.
However, an article in Dr.dk suggests that SAS is “covered” to the tune of 2 billion DKK or 3 billion SEK (around $300m) guaranteed equally by the Danish and Swedish governments.
Norwegian in the worst position
The final airline assessed by the CAPA report was beleaguered Nordic airline Norwegian. The low-cost long haul airline had NOK3.1 bn on the 31st December 2019, equivalent to just 7% of its 2019 revenue, and representative of just 26 days.
So far, the airline has grounded 40% of its long haul fleet and has cut a quarter of its short-haul flights. These measures have been put in place right through to the end of May. Just yesterday the airline announced it would cancel 85% of its flights and would lay off 90% of its workforce, around 7,300 people.
Previously the airline had called upon the government of Norway to offer support. So far, no such support is forthcoming. But it’s not all on the COVID-19 outbreak; the airline has had a rough couple of years all in all.
From investing in the MAX only to have it grounded to constant issues with the Trent 1000 powered Dreamliners, lady luck hasn’t smiled on Norwegian in some time. Now, with few routes left it can fly and clearly very little liquidity to fall back on, it’s tough to see a happy ending for the ambitious Norwegian airline.