Written by: Ollie Watts

The Coronavirus (Covid-19) outbreak has brought about a very turbulent time for airlines worldwide. The airline industry has always been one of the world’s most volatile industries; it is susceptible to contraction from fluctuating fuel prices, terrorism, geo-political crisises, public perception, environmental concerns, market crashes and the like. Now, however, it is facing a very different threat: a virus pandemic. It is facing its biggest challenge since 9/11 and the 2008 financial crash. Oil prices have slipped to below $1 a barrel – for the first time in history. These are very dark and uncertain times. US airlines are due a comprehensive bailout by President Trump, whereas in Europe the situation is more precarious and ad-hoc. Therefore, here we will assess what major European airlines have already fallen foul of the virus, those likely to do so, and those who are much safer – for now. It will culminate in a comparison of some government approaches to the issue across Europe.

Early victims:

Flybe (UK)

Although inevitable for some time, this was a huge loss to the UK’s regional travel network. Flybe was an airline that was close to me personally and geographically: I flew Flybe to and from Manchester during my time at university there, and my home is on the flight path of Southampton Airport – one of Flybe’s biggest bases. A detailed analysis of Flybe’s failures – which were long-standing – can be found in my previous article on Flybe’s sale to a Virgin Atlantic consortium in 2019, who in fact played their part in the eventual downfall by failing to inject fresh funds on several occasions. In sum, Flybe had too many planes, rising fuel and maintenance costs, and had demand undercut on several UK domestic routes by easyJet, Ryanair, and British Airways. Successive management were too light on restructuring measures at an airline that was haemorrhaging money year to year. Coronavirus was the nail in the coffin: it reduced demand and income to the point they had no liquidity left to pay their costs, and indeed their mounting debt. Their inevitable demise eventually arrived on March 5th 2020, leaving UK regional connectivity with a large gap, and several regional airports such as Exeter, Belfast City and Southampton facing dismal futures. The latter relied on the airline for 95% of its flight traffic.

Airlines on the brink:

*Liquidity figures in the following sections will have changed since the time of writing and publication*

Norwegian Air (Norway)

Norwegian Air (commonly referred to as Norwegian) is Europe’s third largest low-cost airline and is best known for re-pioneering budget long-haul travel from 2013 onwards. But alas, it is this accolade that has caused it significant financial difficulties, primarily of its own making. Norwegian flies long-haul routes to popular US airports including New York JFK, Boston, Los Angeles and Orlando MCO from the UK (London Gatwick), France (Paris CDG), Spain (Madrid & Barcelona), Italy (Rome Fiumicino), and Norway (Oslo Gardermoen). Until 2019 it also flew long-haul from Sweden (Stockholm Arlanda) and Denmark (Copenhagen), but cut these due to restructuring and weakened demand prior to Covid-19. Norwegian operates these long-haul flights with fuel-efficient Boeing 787-8 and 787-9 Dreamliners, but they have been plagued by technical issues since 2018 relating to worldwide deficiencies with the Rolls-Royce Trent 1000 engines. The key issue that has exacerbated economic difficulties during coronavirus for the airline is their aggressive route expansion circa 2013, which despite being cut, is still causing adverse consequences. Norwegian consequently has a high debt to asset ratio and its debts totalled $8 billion as of December 2019, hardly promising during a crisis when high liquidity equals survival. It has been given a conditional coronavirus bailout by the Norwegian government of $292 million on the caveat that it reduces its debt to asset ratio, and the airline is also seeking to convert $4.3 billion of its debt into equity and issue new shares. (Reuters)

If successful, this will be welcome news to the c.7,900 staff the airline has temporarily laid off. Time is of the essence and will either tip the state of play in or out of Norwegian’s favour – it will be a tight battle.

Lufthansa (Germany)

Lufthansa is more certain to receive a government bailout than Norwegian given its importance as Germany’s flag-carrier, but this does not detract from the fact it remains at high risk for such a renowned airline. It already had $4.35 billion of unused ticket costs as of December 2019, and under EU rules may still be forced to refund them if demanded by passengers in addition to current tickets. (Bloomberg) If so, this would leave the airline using up all its liquidity in 25 days. CAPA states Lufthansa currently has only 51 days of liquidity. The airline has already taken stringent measures by retiring 27 aircraft from its fleet with immediate effect, including 6 Airbus A380s and 5 Boeing 747s. The size of the government bailout is set to include a caveat that the airline does find a way to refund the aforementioned tickets.

Virgin Atlantic (UK)

This is another surprising name for the category, and events have taken a quick turn for the worse at the airline. Virgin has been plagued with the same technical issues affecting Norwegian as their Boeing 787-9 Dreamliners are also powered by the troubled Rolls-Royce Trent 1000 engine. This required the airline to consequently lease additional Airbus A330s in 2018 and postpone the retirement of its ageing and inefficient Airbus A340s, though the latter’s retirement has now been completed in April 2020. Virgin is at the forefront of a group of industry heavyweights lobbying the UK government for a universal UK aviation bailout, and its own business case has been publicly backed by Airbus and Rolls-Royce. They have now gone further, with founder Richard Branson having written an open letter to Virgin’s employees warning the airline will collapse in the coming months without financial support from the government. With recent years having claimed Monarch, BMI Regional, Thomas Cook, and more recently Flybe, the loss of Virgin would be another catastrophic loss to UK aviation. For now, Virgin has confirmed 3,000 redundancies are on the cards, early retirement of its ageing Boeing 747s, and that it will cease all operations at its London Gatwick base for the foreseeable future.

Safest and safer airlines:

This section includes airline names you would expect and those that would perhaps surprise you. It is based partially on the results of research conducted by Centre for Aviation (CAPA) and laid out by aviation publication Simple Flying regarding which carriers have the best liquidity to see out the Covid-19 pandemic.

Wizz Air (Hungary) – Safest

Top of the list and the most surprising, given its relative size to rivals easyJet and Ryanair, is Hungarian low-cost carrier WizzAir. Unlike its aforementioned rivals, its primary target market and area of operation, with the occasional exception of its UK subsidiary Wizz Air UK (based at London Luton), is Central and Eastern Europe. The airline has around 48% liquidity of its 2019 revenue, leaving it with a maximum of 6 months of operating funds. This is in stark contrast to Norwegian above, who notwithstanding conditional government aid, have only 7% liquidity – 26 days of operating income – from 2019 revenue. WizzAir also has the advantage of having a comparably smaller fleet than its rivals – 111 – who have 337 (Feb 2020) and c.360 respectively. Even when the pandemic calms down, demand will only incrementally increase each month. This benefits WizzAir most out of the three regarding costs and further protective measures.

Ryanair (Republic of Ireland) – Safest

Although they have far more assets (on point of aircraft) than WizzAir, Ryanair has similar liquidity levels. Their liquidity is marginally lower at 47% of 2019 revenue, around 170 days, which is just shy of 6 months of operating funds. However, Ryanair has a much bigger fleet  –  the aforementioned c.360 aircraft – and have a large yet troubled order on their books. They have an order for around 210 Boeing 737 MAX aircraft,(Reuters) the beleaguered and still grounded Boeing flagship product, whose two fatal crashes exposed significant technical flaws. Despite the ongoing Covid-19 pandemic, the airline still expects to receive its first Boeing 737 MAXs in summer 2020 – provided the aircraft is recertified as safe to fly. On the other hand, it has recently confirmed plans to make 3,000 staff redundant to further strengthen itself against coronavirus’ economic pitfalls.

British Airways (UK) – Safer

British Airways (BA) is part of IAG which owns BA, Aer Lingus, Iberia, and Vueling. IAG as a group has around 132 days of liquidity left according to CAPA. However, BA has a mass workforce of 30,000 workers, the majority of whom are on furlough. BA are still operating 15 routes such as London Heathrow-Edinburgh, London Heathrow-Los Angeles, and London Heathrow-Barcelona. Unlike its nearest UK competitor, Virgin Atlantic, it has an on the whole ageing fleet including Boeing 747s and some older Boeing 777s. It may be forced into early retirement of these, including its 12-strong Airbus A380 fleet. Major European airlines operating Airbus A380s such as Air France and Lufthansa have elected to retire these early due to the immense cost and very fluctuant profitability the aircraft offers because of its eminent size. Such retirements will lead to a significant reduction in capacity one Covid-19 starts to tail off, notwithstanding that demand will take months and perhaps years to return to normality. Moreover, it plans to make 12,000 staff redundant, including over 1000 of its 4000 pilots. BA is even debating closing its London Gatwick base, with all operations being consolidated out of its main London Heathrow base. London Gatwick could, for the first time in years, find itself with plenty of spare capacity if BA and Virgin follow through on their touted withdrawals from the West Sussex airport.

easyJet (UK) – Safer

easyJet is in a generally strong position, with 113 days of liquidity.  However, not all is rosy at the famous orange low-cost carrier regarding management relationships. The airline has already received a £600 million coronavirus loan from the UK government, and is set to receive a further £407 million from creditor loans. Yet disagreement remains on another financial responsibility: aircraft order payments. Founder and major stakeholder Sir Stelios Haji-Ioannou – who owns over a third of the airline’s shares – has gone to war with management over an order for 107 new Airbus aircraft worth $4.5 billion. Given the current climate, Sir Stelios believes the order is as good as commercially redundant and has threatened sackings of the board if the order is not cancelled. The likely outcome is the delay/deferral of new aircraft orders, as older aircraft in the fleet are retired or returned to lessors. Unlike major international airlines BA and Virgin, the airline has not yet talked of making redundancies. Yet due to the economic climate, it may not be long before the orange low-cost carrier follows suit.

European Government approaches:

The manner in which governments across Europe are handling airlines seeking state aid is rather variable. The UK is no longer part of the EU, so it has almost total discretion in its approach to the matter. EU member states, by contrast, must have any financial support packages approved by the EU on competition grounds. This has recently been exercised regarding Air France-KLM’s €7 billion state bailout by the French government. In having more flexibility, the UK government has taken a rather hardline stance. Prime Minister Boris Johnson’s Conservative government is ardently free-market; survival of the fittest is very much their mantra towards corporates’ financial difficulties, save the business interruption loans they are offering small and medium-sized businesses during the Covid-19 pandemic. We can attribute such an attitude to why Thomas Cook and Flybe were simply left to fall foul of their own economic turmoil. The latter was due to be bailed out, but when Chancellor of the Exchequer Rishi Sunak replaced his predecessor Sajid Javid,  plans to give Flybe an APD tax break and commercial loan were overruled – Flybe went to the gutter. Mr Sunak has repeatedly made it clear that UK airlines seeking government loans should exhaust investor and shareholder cash injection options before applying for government aid.. Whilst this is sensible from a business operational and management perspective, these are dire times. If airline survival is left to investor chance, many could go under in very little time. Aviation is vital to national infrastructure and economic growth worldwide. EU governments are more liberal in their approaches. Germany is helping Lufthansa, France is helping Air France-KLM, and Denmark is helping SAS Scandinavian.  Despite their liberalism, the EU is trying to ensure its members comply with environmental conditions regarding these state loans. Austria, for example, has explicitly said it will attach conditions regarding emissions targets to any bailouts for Austrian carriers.


In conclusion, whilst the airline industry is a major red flag regarding global emissions, it is equally vital to our global infrastructure, economic growth, and simply our way of life. Governments worldwide are between a rock and a hard place on what to do. Airlines may be predominantly wealthy – as opposed to many small companies – but they will be paramount to restoring our way of life to normality when lockdown measures gradually ease. If government aid is increasingly denied, we may not have many left when this crisis is over. CAPA is reporting most airlines could be bankrupt by the end of May 2020 – a harrowing prospect. Whatever happens, global air travel is going to be very different post-pandemic. You will not have as many airline choices for certain routes or airports, and prices will likely soar, especially if low-cost airlines start to fall. Whenever we next walk down an airliner aisle to our seat, we will hopefully never again take such travel for granted. Covid-19 is on a particular flight path: changing air travel for decades to come.