Zoom and bust: Airline collapses but 'worse is to come'

[marmar]

from the Independent UK:



Zoom and bust: Airline collapses but 'worse is to come'

By Sarah Arnott
Saturday, 30 August 2008




The collapse of Zoom, the budget airline, left 4,500 passengers stranded, another 60,000 with unusable tickets, and more than 600 people without jobs. But expect more of the same, and worse, to come, warn experts.

The spectacular demise of the Canadian carrier this week brings the list of airlines bankrupted by the vicious combination of sky-high fuel costs and wary consumers to more than two dozen. None are safe and the roll call of commercial ruin spans both the globe and the spectrum of services – from business class-only ventures like Silverjet and Eos, to Oasis in Hong Kong, EuroManx from the Isle of Man, and a slew of US carriers including Aloha, ATA and SkyBus.

And last night, Alitalia said it had filed for bankruptcy protection, taking the first step in a plan to restructure and downsize Italy's failing national carrier. The company said in a statement that its board had asked the government to appoint an administrator and had declared insolvency to a Rome court.

Alitalia has been losing some €2m (£1.6m) a day – hurt by labour unrest, competition from budget airlines and high fuel prices. Its shares have been suspended from trading since June.

Even the survivors are having a hard time. Industry stalwarts like British Airways are seeing profits crashing; smaller companies, like Ryanair and Aer Lingus, are reporting losses.

"We've had all sorts going bust – full service, low cost, high end, long haul and short haul – because all buy petrol and all have customers getting poorer," Andrew Lobbenberg, an aviation analyst at ABN Amro, said. "There have been lots of failures already, and there will be more."

Worse still, the bankruptcy rate is set to accelerate as price wars over dwindling customers eat even further into cash reserves, just when the sector enters its usual annual dip. ......(more)

The complete piece is at: http://www.independent.co.uk/news/business/news/zoom-and-bust-airline-collapses-but-worse-is-to-come-913392.html