Aviation

One airline set to be liquidated, while another files for bankruptcy protection

Christian Fleetwood

Christian Fleetwood

Proving just how much the commercial aviation industry is struggling amid the COVID-19 pandemic comes the news of one airline on death row and another on its last legs.

Thai low-cost carrier NokScoot is set to be liquidated, after the airline’s board of directors said they did not see a “path to recovery” on the other side of the COVID-19 pandemic.

NokScoot revealed in a corporate statement late last week that its shareholders would deliberate the resolution to liquidate the airline at a general meeting set to be held “within 14 days”.

A joint venture between Singapore Airlines’ subsidiary Scoot and Thailand’s Nok Air, NokScoot was set up as a low-cost carrier, operating medium- to long-haul flights out of Bangkok’s Don Mueang International Airport

According to its board of directors, the airline had, however, been operating in “very challenging circumstances” since it began flying in 2014 – citing difficulties in expanding its network and a very competitive environment.

The “unprecedented challenges” of the coronavirus pandemic, which has reduced air traffic across the Asia Pacific by at least 98 per cent compared to last year, further exacerbated the situation.

Consequently, the board of directors said they did not see a path to recovery and “sustainable growth for the airline”.

To date, NokScoot said 425 staffers have allegedly been retrenched with full benefits in compliance with Thai labour laws, while a small team of employees will stay on to manage and see through the liquidation process.

Once the process is completed, the airline said these employees will receive similar retrenchment benefits.

Meanwhile, Aeroméxico has announced that it and “certain of its affiliates” have filed for bankruptcy protection in the US so it can implement “a financial restructuring”.

The company said it intends to use Chapter 11 bankruptcy process to “strengthen its financial position” and “implement necessary operational changes” to address the impact of the ongoing COVID-19 pandemic, and create a sustainable platform for the future.

“Our industry faces unprecedented challenges due to significant declines in demand for air transportation,” Aeroméxico CEO Andrés Conesa said in a statement.

“We are committed to taking the necessary measures so that we can operate effectively in this new landscape and be well-prepared for a successful future when the COVID-19 pandemic is behind us.

“We expect to utilise the Chapter 11 process to strengthen our financial position, obtain new financing and increase our liquidity, and create a sustainable platform to succeed in an uncertain global economy.”

Source: iStock/Solange_Z

According to Aeroméxico, the process will allow it to maintain regular operations, and all current tickets, reservations, electronic vouchers and ‘Premier Points’ will remain valid and available for use by customers, in keeping with the airline’s existing terms and conditions.

Aeroméxico said it will continue to operate in accordance with existing permits and concessions throughout this process.

Based in Mexico City, Aeroméxico operates services to more than 90 destinations domestically, across North, Central and South America, the Caribbean, Europe, and Asia. The airline employs at least 16,660 people.

Aeroméxico said it does not expect to be any changes to employees’ day-to-day job responsibilities, and employees will continue to be paid and receive benefits in the ordinary course of business.

The airline also intends to continue ordering goods and services from its suppliers, and expects to meet its current commercial agreements with partner airlines, including its joint cooperation agreement with Delta Air Lines.

It comes after Colombia-based airline Avianca filed for Chapter 11 bankruptcy in May as a result of the “unforeseeable impact of the COVID-19 pandemic”.


Featured image source: iStock/Kittipong Chararoj

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