I probably agree with providing liquidity in the form of some sort of short-term loan in order to live through a completely unexpected macro crisis, if it's done on equal terms to everyone. But Norwegian won't survive that either, I think.
https://en.wikipedia.org/wiki/Scandinavian_Airlines
Again: I'm aware that you haven't said anything to the contrary. But it's useful context.
And yes, a bailout is likely. The govt will likely help keep Norwegian Air's planes flying during the Coronavirus period. Additional help is possible.
[1]: https://www.sasgroup.net/annualreports/2018/assets/pdf/eng/S...
Italy just did so for Alitalia.
https://www.reuters.com/article/us-italy-alitalia-idUSKBN212...
They can always estatise it, but I don't imagine an airliner is strategic enough for that.
> Having lost money each year from 2017 to 2019 and raised cash from shareholders on three occasions, the company’s debts and liabilities had grown to 82 billion Norwegian crowns ($7.9 billion) by the end of last year.
Some have debt, most of the ones where I am do not though. You have depreciation, which is non-cash. Even staff costs have a variable component based on hours flown, although (where I am) they still have to pay a base salary.
(Btw, just generally...most airlines are run very efficiently. They are huge enterprises deploying these big expensive assets, and they run with very little capital. Obviously, this does vary by strategy but the low-cost airlines usually turn their capital more than once...just looking at $LUV...134m passengers, 747 planes, $22bn revenue on invested capital of $10-12bn...just based on a quick calc)
Unsurprisingly, if you are an airline company and you stop running flights then you don't have many costs.
The issue airlines have is labour law. I think we will see countries like the Nordics manage this better (SAS appears to have been able to furlough 90% of their staff) because it is easier to lay off staff temporarily (I believe this is in sector-wide bargaining agreements). In the UK, as a counter-example, it is much harder because there are no sector-wide agreements so temporary lay-off needs to be in your contract. Maybe airlines have this, I don't know but it seems like some don't see what the option is between bailout to pay staff their base salary or layoffs (and btw, airlines could just sack everyone which would end up being massively costly to the rest of us). We aren't bailing out the airlines, we are bailing out the staff.
Their LP’s would probably take a hit to unlock the cash and get into something more likely to rebound faster.
The 787's and the A321LRs are good planes that they could sell, but the 737-800 is an obsolete plane which has a very hard time operating with a profit when competing against the new crop of fuel-efficient narrow bodies. You can't really sell them to anyone for any reasonable amount in the current market. MAX 8's are also hard to get rid off, but for a different reason.
Then the company they got loans from has a repayment deficit, they can repossess the leasing companies assets, and pay to store them, and try to sell them ... but they're going to be getting pennies-on-the-dollar (who wants to pay to store aeroplanes they can't fly for profit?). Duplicate that over the other loans they called in in other industries; now they're burning cash as well??
If the top of the tree, the banks or capitalists, can hold out then they stand to make a tidy packet when markets rebuoy but even then there'll be a huge lag if they laid off multiple tiers of companies.
Either we all have to agree not to force each other to close down, or we all do each other over. It's not pretty.
I'm wondering what happened in 1918 with "Spanish Flu", people instigated social distancing then - closing down schools and churches - so presumably there were businesses too that couldn't pay their rents? I imagine things were less severe because more businesses would own their resources, and would be part of communities that would collapse if they called in what they were owed.
The most important thing in a market economy (aka economies that are not communist), is competition. Competition is the primary thing that keeps costs low. Without it, we (consumers) are all toast - however it'd be great for the stocks of those few remaining airlines (with enormous upside potential). Flying in airplanes is a mostly ineclastic good. this means, people can't just stop flying. All this is extremely bullish for the remaining airlines, in the long run (2 years+).
The last couple weeks have shown this to be quite untrue.
If this pandemic leads people to realise that so much flying really isn't necessary, and actually changes long-term behavior, that could be at least one silver lining.
If people decided to enter markets purely based on profits then shouldn't there be a bunch of competitors for Google's search engine biz?
As to your second part, search engines aren't a high profit business; advertising is.
Since all of the infrastructure already exists it shouldn't take that long to scale back up.
Sorry to be crude, but it beggars belief that people can afford flights, realise why they're discounted, and yet be so short sighted.
Seating like we used to have a few decades back is available. It costs about the same as it used to. People seem to forget how expensive air travel were back in the days, no wonder it was more luxurious.
That's part of the reason the airline requires you to sit in allocated seats - so they can notify the people sitting in neighbouring seats if you have a notifiable disease.
My personal hypothesis is the low pressure ultra-low humidity air in planes dries out mucus membranes in the nose and throat making it more likely for airborne things to get in.
It's not like anyone is going to scrap the planes, or shoot the pilots.
Provided COVID-19 doesn't get going again next winter.
There are of course other options in restructuring etc, but investors can always face the possibility of loosing all the money they have invested.
MERS peaked in 2014 (and 2015, 2016, ...), but there are still cases.
I don't know how many of their employees are Norwegian though..
Don't forget that asterisk. USA unemployment benefits (even in liberal states, like California) are just truly awful. Losing my job "temporarily" for 2 months would cut my income drastically with no recourse (other than finding other employment), and say goodbye to affordable medical care (COBRA costs are outrageous)
This is why we need social safety nets people! I pay 47% of my income to the government and I am 100% fine with raising taxes to pay for Medicare For All and a real social safety net.