Things have been getting better in the aviation industry during this year, or perhaps less bad if you ask some. However, many airlines are still losing money and battling the challenge to stay afloat while COVID-requirements and passenger flows change from one day to another. Still, losing money is not new for some airlines and for a few this could be called “business as usual”. I am talking about those who are called “zombie airlines”. These are airlines which for a long time has been unprofitable and almost constantly threatened with disappearing as brands, but still they manage to survive. Some of these are fascinating case studies that we have followed for long on this blog, so an update on them, seems reasonable.
My favourite zombie airline is Alitalia, especially since I have predicted its demise many times and been wrong every time. It is a classic brand name and one with – in my view – the most elegant and classy commercial ever (link). Still, it seems as if the unfortunate tale of the Italian flag carrier has come to an end (link to article below). Well, sort of at least. All flights under the brand name of Alitalia has been cancelled and its assets are being transferred to its descendant ITA. The troubles are not over yet, as just recently the European Union deemed one of the “emergency loans” that was previously awarded to Alitalia by the Italian government as illegitimate.
South Africa Airways (SAA) is another classic brand in the airline world that has suffered a long and painful erosion of its identity. One indication of its dire situation is that when the name of the airline is googled, the question “Is South African Airways still flying?” comes up as a top result of the search. In late June (link to article below) there was news that the government had signed a memorandum of understanding with the intention to sell 51% of the airline to a private consortium. This consortium has in more recent news (link) been identified as the “Takatso consortium”, which consists of Global Airways, which is based in Johannesburg and owns the new domestic airline Lift, and a private-equity firm. According to the recent report the consortium is close to completing its due diligence before it goes through with the purchase. It remains to be seen how much freedom it will get to reconstruct SAA, which over years has proven very difficult to change, partly because of government and union resistance.
Finally we have Air India, whose troubles were reported on at this blog not long ago (link). That the airline will be privatised and taken over seem to be clear (link to article below), but who it will be remains to be seen. Tata Group has seen as a strong contender, but SpiceJet has also shown interest. Like the two previously mentioned zombie airlines, Air India has been on the ropes for a long time but attracted little interest from potential buyers, mostly because of government imposed restrictions against change and required protections of employees. Anyone with knowledge of bureaucracy in India will have an idea of the challenge a takeover of Air India could bring to the one who takes on this task.
While Alitalia probably is a brand name that will be left for memories and archives, SAA and Air India may still have a future. That will however depend on if they can be rebuilt and reformed. This will include not only financial change and the need to move towards making steady profit, but it will also require a change of company culture. It will be interesting to continue to follow these and other zombie airlines as they try to survive in the aviation industry of today.
Link to articles:
European Commission Approves €40m Aid For Alitalia
South African Airways going private
Air India Privatisation: Tata or SpiceJet, Who Will Take Charge of Maharaja? Answer Soon
Do I laugh or do I cry..?
I have the same confused feeling!