Europe's skies in turmoil
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Europe's skies in turmoil
From Guardian Unlimited...
Airlines across Europe are fighting for their survival post September 11 and many are losing the battle, writes Andrew Osborn
Andrew Osborn
Friday October 5, 2001
The Guardian
Many European airlines had a deathly pallor about them before September 11 but the razing of the World Trade Centre has delivered a coup de grace to a hopelessly overcrowded industry in no position to recover.
Rigor mortis has, in some cases, already set in although the airlines in question refuse to recognise their own demise, preferring to place their faith in last-ditch resuscitations of the financial variety.
The truth is, however, that no amount of puffing and panting can revive their flagging fortunes and emergency cash infusions will quickly dry up in corporate veins which have long since run empty.
For the terrorist attacks on the US have triggered what free marketeers and the European commission have long been crossing their fingers for an industry shake-out in which Europe's many failing airlines are finally put out of their misery.
Swissair has so far been the most high-profile victim of the slump but other airlines are certain to follow suit and they will not be able to rely on state aid of the kind doled out to Swissair to keep them aloft for a few extra months.
European governments have, it is true, poured billions into failing flag carriers over the years in the name of national pride and prestige. But the creeping victory of free market economics over government intervention means that such a practice is no longer seen as acceptable.
Nor is it even legal in the EU, where the single market is supposed to ensure that companies compete on an equal footing. Brussels may have been willing to give its blessing to such aid in the past but those days are over.
The only reason that the Swiss government can get away with bailing out Swissair is because the alpine nation is not a member of the EU and therefore not bound by its rules and regulations.
But Belgium's national airline Sabena - which has turned a profit only twice since 1958 - is not in such a fortunate position. It is also on the brink of melting down and has filed for bankruptcy protection.
The most it can hope for, however, is a bridging loan from the Belgian government, which is only likely to extend its miserable financial existence temporarily.
The warning lights are flashing all over Europe. Dutch airline KLM has announced swingeing job cuts, Belgian charter airline City Bird has gone bust and Greece's Olympic Airways is deeply indebted. Air France has introduced a hiring freeze, Germany's Lufthansa has put on hold an order for 19 new planes and Scandinavian airlines has shed 1,000 staff.
The outlook for Europe's airlines is, in short, bleak, far bleaker than it was before September 11. Airlines were already labouring under high fuel prices, cut-price competition from upstarts such as Ryanair and too much capacity.
But what the events of September 11 have done is to push many over the edge and to accelerate a shake-out which many analysts believed was inevitable.
With public confidence in flying now at an all-time low, bookings down dramatically and transatlantic flights a shadow of their former selves the bad times just got a lot worse.
Over the coming months many a European airline is likely to go belly-up, although government loans (which will need to be paid back) may allow them to do so with a vestige of dignity.
As in the motor industry, prestigious brand names such as Swissair may well be preserved and sold off to the highest bidder. But the harsh truth is that jobs will be shed in their tens of thousands and the idea that every European nation has the divine right to have its own flag carrier will be laid to rest once and for all.
Guardian Unlimited © Guardian Newspapers Limited 2001
Airlines across Europe are fighting for their survival post September 11 and many are losing the battle, writes Andrew Osborn
Andrew Osborn
Friday October 5, 2001
The Guardian
Many European airlines had a deathly pallor about them before September 11 but the razing of the World Trade Centre has delivered a coup de grace to a hopelessly overcrowded industry in no position to recover.
Rigor mortis has, in some cases, already set in although the airlines in question refuse to recognise their own demise, preferring to place their faith in last-ditch resuscitations of the financial variety.
The truth is, however, that no amount of puffing and panting can revive their flagging fortunes and emergency cash infusions will quickly dry up in corporate veins which have long since run empty.
For the terrorist attacks on the US have triggered what free marketeers and the European commission have long been crossing their fingers for an industry shake-out in which Europe's many failing airlines are finally put out of their misery.
Swissair has so far been the most high-profile victim of the slump but other airlines are certain to follow suit and they will not be able to rely on state aid of the kind doled out to Swissair to keep them aloft for a few extra months.
European governments have, it is true, poured billions into failing flag carriers over the years in the name of national pride and prestige. But the creeping victory of free market economics over government intervention means that such a practice is no longer seen as acceptable.
Nor is it even legal in the EU, where the single market is supposed to ensure that companies compete on an equal footing. Brussels may have been willing to give its blessing to such aid in the past but those days are over.
The only reason that the Swiss government can get away with bailing out Swissair is because the alpine nation is not a member of the EU and therefore not bound by its rules and regulations.
But Belgium's national airline Sabena - which has turned a profit only twice since 1958 - is not in such a fortunate position. It is also on the brink of melting down and has filed for bankruptcy protection.
The most it can hope for, however, is a bridging loan from the Belgian government, which is only likely to extend its miserable financial existence temporarily.
The warning lights are flashing all over Europe. Dutch airline KLM has announced swingeing job cuts, Belgian charter airline City Bird has gone bust and Greece's Olympic Airways is deeply indebted. Air France has introduced a hiring freeze, Germany's Lufthansa has put on hold an order for 19 new planes and Scandinavian airlines has shed 1,000 staff.
The outlook for Europe's airlines is, in short, bleak, far bleaker than it was before September 11. Airlines were already labouring under high fuel prices, cut-price competition from upstarts such as Ryanair and too much capacity.
But what the events of September 11 have done is to push many over the edge and to accelerate a shake-out which many analysts believed was inevitable.
With public confidence in flying now at an all-time low, bookings down dramatically and transatlantic flights a shadow of their former selves the bad times just got a lot worse.
Over the coming months many a European airline is likely to go belly-up, although government loans (which will need to be paid back) may allow them to do so with a vestige of dignity.
As in the motor industry, prestigious brand names such as Swissair may well be preserved and sold off to the highest bidder. But the harsh truth is that jobs will be shed in their tens of thousands and the idea that every European nation has the divine right to have its own flag carrier will be laid to rest once and for all.
Guardian Unlimited © Guardian Newspapers Limited 2001
