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Bankruptcy pandemic: How coronavirus destroys world's largest companies

Author : 112.ua News Agency

Source : 112 Ukraine

The Canadian circus company Cirque du Soleil, the giant car rental Hertz, the world's third largest cruise operator Norwegian Cruise Line Holdings, the European manufacturer of aircraft Airbus and others are in the list of victims of the pandemic
22:43, 7 July 2020

Boom times. Artem Aleshko/TheConversation

At the beginning of April, the International Monetary Fund stated that the economic crisis caused by the coronavirus pandemic is worse than the global crisis of 2008-2009.

"The greatest risk that we see is a wave of bankruptcies and job cuts that will complicate the economic recovery," said IMF Managing Director Kristalina Georgieva.

Unfortunately, this is what happened.

Cirque du Soleil

The world-famous Canadian circus company on June 29 filed for bankruptcy, the reason for which was the forced cessation of all performances against the backdrop of a pandemic.

"For the past 36 years, Cirque du Soleil has been a very successful and profitable organization. However, with zero income after the forced closure of all our shows because of Covid-19, management had to act decisively to protect the future of the company," said Daniel Lamarre, president and CEO of Cirque du Soleil Entertainment Group.

So, in connection with Covid-19, the artists had to suspend work on 44 productions, and the company was forced to cut 3,480 jobs. Now the circus, which is located in Montreal, plans to restructure its debts with the help of the Canadian government and investment companies.

Cirque du Soleil was founded in 1984 in Canada. It is known for refusing animals to participate in performances, as well as shows combining circus skills with choreography.

Hertz

Bankruptcy petition was also filed by one of the world's largest car rental companies Hertz Global Holdings Inc (HTZ), which accumulated $ 17 billion in debt.

The car rental giant came to such a decision at the end of May, after which it began selling its car fleet. On June 12, the court allowed Hertz to sell $ 1 billion worth of shares.

Related: Travels in terms of Covid-19: MFA provides recommendations for Ukrainians

The company called the impact of the pandemic on travel and the demand for rental cars too sharp, which in turn led to a decrease in revenue. There was nothing to pay off to creditors. At present, Hertz continues to work for clients, and a bankruptcy petition will allow it to restructure its debts.

Hertz Global Holdings began operations 100 years ago in Chicago. It survived the Great Depression, the suspension of US car production during World War II, and numerous oil price shocks.

Norwegian Cruise Line Holdings

The world's largest cruise company has expressed doubt about its ability to continue business due to the impact of the pandemic.

"Covid-19 is expected to continue to have a significant impact on our financial condition and operations, which negatively affects our ability to receive acceptable financing," said a representative of Norwegian Cruise Line Holdings.

In mid-June, the cruise operator extended the suspension of some of its trips until September 30. Separate trips, which were planned for October, will also not take place.

Over the current year, the company's shares have lost almost 80% of their market value. Since the onset of the crisis, Norwegian Cruise Line Holdings has raised $ 1.55 billion in loans.

Airbus SE

Over the next two years, the European aircraft manufacturing concern plans to reduce production by 40%.

According to CEO of the company, in an interview with Die Welt, production will not return to its previous level until 2025.

Reuters, citing its sources, writes that as early as this week, the company may submit a plan for a major reorganization. How many employees will fall under the reduction is not yet known.

J.C. Penney

The largest American retailer, existing in the market since the distant 1902, declared bankruptcy in mid-May, reports CBS News. As part of the debt restructuring process, J.C. Penney will close about 30% of its stores.

In the last quarter, the company's sales fell by almost 8% to $ 3.4 billion compared to the same period last year, and revenue amounted to $ 27 million compared with $ 75 million for the same period of 2019.

J.C. Penney overdue two debt payments in April and May, which analysts regarded as a harbinger of bankruptcy.

The situation in Ukraine

Authorities assure that Ukraine does not face bankruptcy in connection with the Covid-19 pandemic. According to President Zelensky, the economic crisis will be able to "somehow overcomed."

However, some large companies are not so optimistic. For example, the international airport "Kyiv" (Zhuliany) has lost all passenger traffic and almost all revenues since the beginning of quarantine, but at the same time continues to bear the costs of maintaining infrastructure, flight safety, paying taxes and loans.

In order to avoid bankruptcy, the airport began a phased reduction of its employees. In total, about 2 000 people work in Zhulyany, and another 8 000 work in related enterprises collaborating with them. It is planned to reduce 50% of the staff, including highly qualified specialists in the industry.

Related: Number of Covid-struck patients with pneumonia in Ukraine decreases, - Healthcare Minister

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